Abstract
This paper shows that greater capital accumultation may be achieved under centralized rather than decentralized employment. Centralized and decentralized cities and their related rent profiles can be viewed as outcomes of alternative spatial competitive forces. To see this, rent profiles under spatial monopoly and spatial competition must be derived.
If entry occurs at the production center, then due to wage competition by firms the rent will increase. In fact land rents are likely to be higher in cities where several firms locate at the CBD rather than in a “company town” city with a single employer as predicted by our spatial labor market model à la Cournot. In contrast, Löschian entry at the market boundary results in the lowest rent levels around the production center.
Aggregate rents are greater when entry takes place at the original production center than when entry occurs at the market boundary. This implies that under certain circumstances national wealth may more effectively be accumulated in the form of urban rent under centralized rather than decentralized employment.
