Spatial Growth and Redevelopment with Perfect Foresight and Durable Housing

In this paper, I present a theoretical model of the spatial growth of an urban area with durable housing. I combine several assumptions that typically complicate the analysis: (i) housing developers have perfect foresight; (ii) the initial development and many waves of redevelopment are considered in each developer's plan; and (iii) the closed-city assumption is made, so that the time path of population is exogenous and that of consumer utility is endogenous. I still obtain explicit solutions for the spatial pattern of urban growth, and for the timing of the initial residential development and each successive redevelopment at each distance from the urban center. I compare perfect-foresight growth to growth with static expectations, and I examine the comparative statics of both.