Land use and rent gradients with a monopoly vendor and two central business districts

Dispersed consumer amenities such as shopping and cultural attractions greatly influence land use patterns and rent gradients. Lai and Tsai (J Urban Econ 63:536-543, 2008) generalize the traditional Alonso-Mills-Muth model by introducing a monopoly vendor and show that the vendor will choose a boundary location. We generalize their model by allowing for inter-city shopping, which is very common in the real world. The location choice of a monopoly vendor and the consequent changes of urban configuration in two adjacent cities are discussed. This paper shows that as the distance between two CBDs decreases, the vendor may choose to locate at an inner city boundary, at the mid-point between the two cities, and at one of the outer boundaries, respectively. In many cases, a core-periphery urban structure will result.