AN URBAN ECONOMIC GROWTH MODEL WITH ENDOGENOUS INFRASTRUCTURE ALLOCATION

摘要

In this paper, an urban economic growth model with endogenous infrastructure allocation is given by introducing the two-variable utility function for city's inhabitant. A two-dimensional dynamical system is obtained by solving the utility maximization problem and it is proved that this system has the unique non-zero equilibrium which is a saddle. The model has the unique optimal growth and an optimal rate of infrastructure allocation.