We introduce into the standard spatial competition model the consumption of land by households, and study the spatial competition under the influence of a land market. In contrast to the standard assumption of a fixed, given distribution of households, we introduce the possibility of households' relocation in reaction to firms' location decisions. Thus, the spatial distribution of households is treated as endogenous, and a land market is introduced on which households compete for land-use. Households consume simultaneously land and firms' output. Accordingly, the demand of each household becomes in turn endogenous as it depends on the income left after the land rent is paid. Not surprisingly, the results obtained within this more general framework prove to be very different from the standard results. For example, in the 2- and 3-firm cases, the optimal configuration of firms is a Nash equilibrium when transport costs are high enough or the amount of vacant land is large enough. The existence property is restored in the 3-firm case when the transport costs are high enough. The introduction of vacant land causes a discontinuous change in the set of equilibrium configurations.

Using the Eaton and Lipsey mode, one shows 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

We study imperfect competition in the labor market when both workers and firms are heterogeneous. When firms cannot observe workers' skill, firms pay workers equal wages, but workers absorb training costs. When firms can identify worker types, firms pay different net wages to different workers. Voters select the level of general education that is financed by a lump‐sum tax. Workers are on average better off when firms can observe workers' skill for a given level of general human capital, but the median voter prefers a higher level of general human capital when firms cannot observe worker types.

This paper examines strategic behavior of developers who, through offering different congested public‐good packages and revenue/fiscal schemes, compete for residents who are differentiated by income. There is an endogenous determination of numbers and sizes of communities. Developers have an incentive to strongly differentiate their public‐good offerings. In terms of pricing strategies, developers exhibit sharply contrasting behaviors. In low‐income communities, housing consumption is subsidized once lots are priced. In high‐income communities housing consumption is generally taxed.