Agent based exploration of urban economic dynamics under the rent-gap hypotheses

We present a stylised agent-based model of housing investment based on the rent gap theory proposed by the late Neil Smith. We couple Smith’s supply-side approach to investment, with individual-level residential mobility within a city. The model explores the impact of varying levels of capital flowing in the city and reproduces certain theorised and observed dynamics emerging from the cyclic nature of investment: the tendency of capital to spatially concentrate generating intra-urban inequalities, the occasional formation of persistent pockets of disinvestment and phenomena such as gentrification.