How should the size and number of cities evolve optimally as population grows? Stripped of the constraints of geography itself, the setup of the new economic geography (NEG) implies that de-agglomeration (or de-urbanization) is efficient. The number of cities increases while the size of each decreases on the optimal path until the economy suddenly disperses to tiny towns of stand-alone firms each specializing in a unique good. The cause of this narrow result is the NEG's strong emphasis on intercity trade to satisfy the taste for more goods. For the same aggregate population, a system of smaller cities saves time lost in commuting, has a larger labor supply, and makes more goods than does a system of larger cities. Falling interurban trading costs favor this de-urbanization process. Only if intraurban commuting costs fall sufficiently, can a pattern of growing city sizes be efficient with growing population. Of course, when the number of cities or the geographic space itself is limited or asymmetric, then agglomeration can arise as an artifact of the constraints imposed by geography as demonstrated by numerous NEG models. This reveals that the central agglomerative force in the NEG is space itself and not the underlying economic relations. Copyright 2004, Oxford University Press.
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Volume (Year): 4 (2004) Issue (Month): 2 (April) Pages: 181-199 Download reference. The following formats are available: HTML
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Handle: RePEc:oup:jecgeo:v:4:y:2004:i:2:p:181-199
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992.
"Growth in Cities,"
Journal of Political Economy,
University of Chicago Press, vol. 100(6), pages 1126-52, December.
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Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991.
"Growth in Cities,"
NBER Working Papers
3787, National Bureau of Economic Research, Inc.
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Cited by: (explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
PICARD, Pierre & TABUCHI, Takatoshi, 2003.
"Natural agglomeration,"
CORE Discussion Papers
2003101, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Abdel-Rahman, Hesham M. & Anas, Alex, 2003.
"Theories of system of cities,"
Working Papers
2003-08, University of New Orleans, Department of Economics and Finance.
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Abdel-Rahman, Hesham M. & Anas, Alex, 2004.
"Theories of systems of cities,"
Handbook of Regional and Urban Economics,
in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 52, pages 2293-2339
Elsevier.
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