ABSTRACT
Second specification. For the second specification, the spatial setup is assumed to be fully symmetric. Land endowments are the same at both locations, i.e. ~ =~. Each consumer has to see the other on a regular schedule. Commuting costs amounting to t units of the composite commodity arise for each consumer if the two live at different locations (as they will by assumption). Consumption of the consumer living at location k is denoted by (Xb yd. Starrett's incentive II for the consumer at location 1 to move to the other location is
bundle (XI' YI) at less expenditures. Therefore, in equilibrium, he would not remain at location 1. Similarly, the incentive 12 of the consumer living at k = 2 to move to k = 1 amounts to
12 = '2X2 + Y2 - ('I X2 + Y2 - t). Since by assumption Xl = ~ = ~ = X2, it follows that the average
incentive to move (II + 12)/2 is equal to t and, hence, positive. Therefore, for any pair '1 and '2 of land rents at the two locations, at least one consumer would have an incentive to move. An equilibrium configuration does not exist.
