Existence and Uniqueness of Equilibrium for a Spatial Model of Social Interactions

Author Name Adrien BLANCHET  (Université de Toulouse) /Pascal MOSSAY  (University of Reading and CORE) /Filippo SANTAMBROGIO  (Université Paris Sud)
Creation Date/NO. June 2013 13-E-055
Research Project Theory and Empirics of Urban Growth and Spatial Structure
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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 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 multiplicity of equilibria in the circular economy is interpreted as a lack of convexity of the problem.