General Equilibrium Theories of Spatial Agglomeration

Author(s):  
Marcus Berliant ◽  
Ping Wang

General equilibrium theories of spatial agglomeration are closed models of agent location that explain the formation and growth of cities. There are several types of such theories: conventional Arrow-Debreu competitive equilibrium models and monopolistic competition models, as well as game theoretic models including search and matching setups. Three types of spatial agglomeration forces often come into play: trade, production, and knowledge transmission, under which cities are formed in equilibrium as marketplaces, factory towns, and idea laboratories, respectively. Agglomeration dynamics are linked to urban growth in the long run.

Author(s):  
PierCarlo Nicola

Riassunto. – Almeno a partire da Pareto le analogie meccaniche hanno giocato un ruolo rilevante nella teoria economica; ma sarebbe ingiusto passare sotto silenzio il fatto che Marshall, praticamente coetaneo di Pareto, propendeva piuttosto per l’impiego di analogie di natura biologica. Questo detto, l’equilibrio generale, attualmente il paradigma più diffuso fra i cultori di teoria economica, si presta mirabilmente a sottolineare le analogie meccaniche proponibili nella teoria economica. Partendo dalla formulazione canonica dell’equilibrio generale concorrenziale, come venne proposta da Arrow e Debreu nel 1954, l’intervento si propone di presentare succintamente alcune delle estensioni formulate nel corso degli ultimi 50 anni:– l’introduzione dei monopoli e della concorrenza monopolistica;– i prezzi rigidi e il razionamento;– le generazioni sovrapposte;– gli equilibri temporanei e le aspettative soggettive;– gli equilibri approssimati in presenza di non convessità; – l’infinità degli agenti e la concorrenza perfetta;– l’incertezza;– i mercati incompleti e le attività finanziarie.Vengono brevemente discussi anche i problemi che sorgono nell’applicazione di modelli di equilibrio generale allo studio di economie concrete, e si sottolinea il fatto che i dati economici sono sempre soggetti ad errori spesso rilevanti, mentre quasi mai é possibile condurre esperimenti controllabili, diversamente da quanto avviene nella fisica. Le applicazioni portano naturalmente a chiedersi quale utilità possono rivestire i modelli di equilibrio generale a fini previsionali.***Abstract. – Since Pareto times mechanical analogies played a relevant role in economic theory; but it is necessary to underline that Marshall, an economist contemporary to Pareto, preferred to employ biological analogies. General equilibrium, presently the mainstream paradigm in economic theory, lends itself very naturally to underline mechanical analogies permeating economic theory. Starting from the canonical formulation of general equilibrium, as proposed by Arrow and Debreu in 1954, our aim is to briefly recall some extensions made during the last 50 years:– the inclusion of monopolies and monopolistic competition;– sticky prices and rationing;– overlapping generations;– temporary equilibrium and subjective expectations;– approssimate equilibria under non convexities;– infinity of agents and perfect competition;– uncertainty;– incomplete markets and financial activities.We discuss also some problems which are present in applying general equilibrium models to our days economies, and we underline the fact that economic data are always affected by errors, while very rarely it is possible to do controlled experiments, contrary to what happens in physics. Therefore, it is natural to ask which is the utility of general equilibrium models as far as forecasting activities are of interest.


2021 ◽  
Vol 10 (2) ◽  
pp. 157-163
Author(s):  
Vincent Boitier

In this short article, I build an idea-based growth model with perfect competition in a representative household economy. I obtain significant findings that confirm Boitier (2019). First, a competitive equilibrium, increasing returns to scale, and innovations can be tenable. For that, firms must raise capital from shareholders, and the production function must show decreasing returns to scale in the stock of ideas and in labor. Second, the developed idea-based growth model admits a balanced growth path similar to the one provided in an idea-based growth model with monopolistic competition. Whether innovations are competitive or thrive under monopolistic competition does not constitute an engine-driving long-run growth. Importantly, this reconciles Romer (1990, 2015) with Boldrin and Levine (2008).


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