Blanchet, Adrien, Mossay, Pascal and Santambrogio, Filippo (2014) Existence and uniqueness of equilibrium for a spatial model of social interactions. TSE Working Paper, n. 14-489

There is a more recent version of this item available.

Preview

Text Download (573kB) | Preview

Abstract

We extend Beckmann’s spatial model of social interactions to the case of a two-dimensional spatial economy involving a large class of utility functions, accessing costs, and space-dependent amenities. We show that spatial equilibria derive from a potential functional. By proving the existence of a minimiser of the functional, we obtain that of a spatial equilibrium. Under mild conditions on the primitives of the economy, the functional is shown to satisfy displacement convexity, a concept used in the theory of optimal transportation. This provides a variational characterisation of spatial equilibria. Moreover, the strict displacement convexity of the functional ensures the uniqueness of spatial equilibrium. Also, the spatial symmetry of equilibrium is derived from that of the spatial primitives of the economy. Several examples illustrate the scope of our results. In particular, the emergence of multiple of equilibria in the circular economy is interpreted as a lack of convexity of the problem.

Available Versions of this Item

• Existence and uniqueness of equilibrium for a spatial model of social interactions. (deposited 09 Jul 2014 17:44) [Currently Displayed]
  • Existence and uniqueness of equilibrium for a spatial model of social interactions. (deposited 18 Mar 2016 10:51)