Abstract
After a long dormant period, Lower Sixth Avenue in New York has undergone a rapid revitalisation. We show that a simple search theoretic model with information spillovers can explain both the period of underuse and the rapid turnaround. The model reduces to a simple equation, which allows us to do comparative statics on the duration of vacancies. We show how the solution reacts to changes in market structure and changes in search technology. The model is suggestive of difficulties that may occur in many markets in which there are changes over time in the optimal use of resources. At one time Lower Sixth Avenue was one of the most fashionable retail centres in Manhattan, but the area collapsed as a retail centre when the affluent moved further uptown and to the suburbs. Today, Sixth Avenue is in the midst of a rapid turnaround, as reported in the Sunday New York Times by Claudia
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