Communication technologies and urban spatial organization: A general equilibrium analysis

This thesis addresses a problem concerning the equilibrium location of firms and households in metropolitan areas. Specifically, we develop a general equilibrium model of the city with a multi-unit approach to the location of firms. Each firm consists of a front-unit (e.g., business office) and back-unit (e.g., plant or back-office) which exchange information or services. Each front-unit interacts with all the other front-units for the purpose of business communications, while each back-unit exchanges information or management services only with the front-unit of the same firm. Each firm must choose the location of its front-unit and back-unit optimally. The equilibrium spatial configuration of the city is determined as an outcome of interactions among all firms and households through competitive land and labor markets. By using the model, we examine the possible effects of telecommunication technologies on the spatial organization of large cities. In particular, it is demonstrated that the advancement of intrafirm communication technologies will eventually lead to a dichotomy of firm activities, where the front-unit activity (specializing in extrafirm communications) will concentrate in the city center, while the back-unit activity will locate in the suburbs. It is shown that depending on the parameters, a variety of interesting patterns of metropolitan spatial organization can emerge