Urban Configurations with Suburban Employment by a Monopoly Vendor

Lai and Tsai (2008) incorporate a monopoly vendor in the Alonso-Mills-Muth model and find that the vendor will locate at one of the city boundaries. This article extends Lai and Tsai (2008) by embodying the production side and labor market for the monopoly. It endogenizes the composite good price, the wage, and the location of the subcenter to investigate the pricing behavior, the determination of the wage in the subcenter, and the urban configurations. It is shown that the monopoly will locate itself in the suburb to form a subcenter. Moreover, the rent-maximizing government will regulate the vendor to locate itself to form an overlapping land rent pattern between the central city and the suburban area.