Dynamics of city formation
AbstractThis paper examines city formation in a country whose urban population is growing steadily over time, with new cities required to accommodate this growth. In contrast to most of the literature there is immobility of housing and urban infrastructure, and investment in these assets is taken on the basis of forward-looking behavior. In the presence of these fixed assets cities form sequentially, without the population swings in existing cities that arise in current models, but with swings in house rents. Equilibrium city size, absent government, may be larger or smaller than is efficient, depending on how urban externalities vary with population. Efficient formation of cities with internalization of externalities involves local government intervention and borrowing to finance development. The paper explores the institutions required for successful local government intervention. (Copyright: Elsevier)
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Bibliographic InfoArticle provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.
Volume (Year): 12 (2009)
Issue (Month): 2 (April)
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Find related papers by JEL classification:
- R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
- R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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