Technological Linkages and Efficient Location of Indivisible Activities: Koopmans - Beckmann and von Thünen Unified

Abstract

Consider a model à la Koopmans-Beckmann involving two indivisible and interactive firms, as well as a continuum of workers. Firm 2 uses labor, while firm 1 uses labor and good 2 produced by firm 2; both goods 1 and 2 can be exported, but good 2 cannot be imported. The land capitalization process, based on workers′ competition in a perfectly competitive land market, is used to design a noncooperative game between firms 1 and 2. The equilibria of this game always exist and are socially optimal. Various extensions of the basic model are also discussed. © 1993 Academic Press. All rights reserved.