Saving and consumption in cities

This paper examines urban residential location and rent determination within a city populated by consumers acting with perfect foresight. In this setting, the consumption and saving decisions of city residents are determined jointly with their choice of location, thereby offering an initial step to understanding how housing services influence non-durable consumption, and vice versa. Housing, supplied by profit-maximizing land owners, is distinguished from more non-descript varieties of durable consumption by the attributes and amenities it provides occupants. These attributes are limited in supply, indivisible, and distinguished by their location in geographic space and time of development.