Question: 5. Consider the matching model in a spatial context. Workers are uniformly distributed around a wheel that is 12 units. Each firm chooses an address

 5. Consider the matching model in a spatial context. Workers are

5. Consider the matching model in a spatial context. Workers are uniformly distributed around a wheel that is 12 units. Each firm chooses an address on the wheel and hires two workers. The cost of commuting is incorporated into the market wage: wage 18 + 12*d, where d is the distance from the worker to the nearest firm (in units). Illustrate the determination of the wage in a city with 2 firms that each hire 2 workers and a city with 4 firms that each hire 2 workers. The wage for each worker in a city with 2 firms is $ The wage for each worker in a city with 6 firms is $ The benefit to firm locating in the cluster is $ per worker

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!