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Unformatted text preview: Econ 366 Notes 9/24/2008 FIRM AND HOUSEHOLD LOCATION: DECENTRALIZED EMPLOYMENT Access to the CBD is valuable even to a non CBD firm due to:- Agglomeration economies- Access to export facility It pays high rent but saves in transport costs By locating in suburb, firm has to pay high transport costs but saves on- High land rents- Wage rate offered to works who also save on commuting ^^^Objection to theory: we have assumed that all households go to the CBD to work- But, this is a contradiction o Not all firms are located in the CBD Firm Theory: some firms are located at different places according to their rent offer curves^^^ Some feel that mono-centric model is inappropriate as not all workers work at the CBD However, the location equilibrium condition still holds since workers and indifferent between CBD and suburban jobs Wages vary according to job location (suburban jobs would pay less) Hence, the shape of the rent function is not affected by employment decentralizations (given:...
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This note was uploaded on 09/26/2009 for the course ECON 366 taught by Professor Sengupta during the Fall '08 term at USC.
- Fall '08