This 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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Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.
Volume (Year): 12 (2009) Issue (Month): 2 (April) Pages: 233-254 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: R1 - Urban, Rural, and Regional Economics - - General Regional Economics R5 - Urban, Rural, and Regional Economics - - Regional Government Analysis O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses H7 - Public Economics - - State and Local Government; Intergovernmental Relations
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.:
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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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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