Existence and Uniqueness of Solutions to the Wage Equation of Dixit-Stiglitz-Krugman Model with No Restriction on Transport Costs

• Main Authors: Minoru Tabata, Nobuoki Eshima
• Format: Article
• Language: English
• Published: Hindawi Limited 2017-01-01
• Series: Discrete Dynamics in Nature and Society
• Online Access: http://dx.doi.org/10.1155/2017/9341502

In spatial economics, the distribution of wages is described by a solution to the wage equation of Dixit-Stiglitz-Krugman model. The wage equation is a discrete equation that has a double nonlinear singular structure in the sense that the equation contains a discrete nonlinear operator whose kernel itself is expressed by another discrete nonlinear operator with a singularity. In this article, no restrictions are imposed on the maximum of transport costs of the model and on the number of regions where economic activities are conducted. Applying Brouwer fixed point theorem to this discrete double nonlinear singular operator, we prove sufficient conditions for the wage equation to have a solution and a unique one.