PREFERENCE FOR REGIONAL INTRINSIC MENU VARIETY AND STRUCTURE OF URBAN SYSTEMS

Abstract

 This study assumes that there is aggregate heterogeneity of the local menus (goods) produced in different regions, and the households have preference for the variety of local menus. Then, this study analyzes the structure of urban system composed of two regions. In order to conduct the analysis, this study introduces the households’ preference for the variety of local menus into the Core-Periphery model of Krugman. Then, this study analyzes the effect of reduction in transportation cost between the regions on the population distribution across the regions. Through the analysis, this study shows that the reduction in transportation cost between the regions can promote the population dispersion across the regions if the households’ preference for the variety of local menus is sufficiently strong. In addition, this study shows that reinforcement of households’ preference for the variety of local menus also promote the population dispersion across the regions.