Econometrica: Sep 1990, Volume 58, Issue 5

On the Optimality of Central Places<1101:OTOOCP>2.0.CO;2-Y
p. 1101-1119

Jacques-Francois Thisse, Martine Quinzii

Using the Eaton and Lipsey model, we show that a hierarchical system of central places is socially optimal: firms having less frequent purchases are clustered with firms having more frequent purchases in any configuration minimizing total transport and production costs.

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