An extension of Krugman’s core–periphery model to the case of a continuous domain: Existence and uniqueness of solutions of a system of nonlinear integral equations in spatial economics

We consider a model that is an extension of Krugman’s core–periphery model to the case of a bounded closed domain included in a Euclidean space. We can describe the relation of the density of workers, the density of nominal wages, and the density of real wages by the system of nonlinear integral equations of the model. If we obtain a solution of the system under the condition that the density of workers is given, then the solution is called a short-run equilibrium. In this paper we prove that this model has a short-run equilibrium, and we obtain a sufficient condition for its uniqueness. Moreover we obtain upper and lower estimates for short-run equilibria, and we construct a useful iteration scheme to numerically obtain short-run equilibria.