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The Costs of Agglomeration: Land Prices in French Cities

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  • Pierre-Philippe Combes

    ()
    (Université d'Aix-Marseille - Aix Marseille Université, CEPR - Center for Economic Policy Research - CEPR)

  • Gilles Duranton

    ()
    (Wharton School, University of Pennsylvania - University of Pennsylvania)

  • Laurent Gobillon

    ()
    (CEPR - Center for Economic Policy Research - CEPR, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, INED - Institut National d'Etudes Démographiques Paris - INED, IZA - Institute for the Study of Labor - IZA)

Abstract

We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French land price data. Our preferred estimate, which handles a number of estimation concerns, stands at 0.041. Our approach also yields a number of intermediate outputs of independent interest such as a distance gradient for land prices and the elasticity of unit land prices with respect to city population. For the latter, our preferred estimate is 0.72.

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Bibliographic Info

Paper provided by HAL in its series PSE Working Papers with number halshs-00849078.

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Date of creation: 30 Jul 2013
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Handle: RePEc:hal:psewpa:halshs-00849078

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Keywords: Urban costs ; Land prices ; Land use ; Agglomeration;

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References

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  1. David Albouy & Gabriel Ehrlich, 2012. "Metropolitan Land Values and Housing Productivity," NBER Working Papers 18110, National Bureau of Economic Research, Inc.
  2. Davis, Morris & Heathcote, Jonathan, 2005. "The Price and Quantity of Residential Land in the United States," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5333, C.E.P.R. Discussion Papers.
  3. Jordan Rappaport, 2004. "Moving to Nice Weather," Econometric Society 2004 North American Summer Meetings, Econometric Society 188, Econometric Society.
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  8. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 549-576.
  9. David Card & Alan B. Krueger, 1991. "School Quality and Black-White Relative Earnings: A Direct Assessment," NBER Working Papers 3713, National Bureau of Economic Research, Inc.
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  13. Morris A. Davis & Francois Ortalo-Magne, 2011. "Household Expenditures, Wages, Rents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 248-261, April.
  14. Diego Puga, 2009. "The magnitude and causes of agglomeration economies," Working Papers, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales 2009-09, Instituto Madrileño de Estudios Avanzados (IMDEA) Ciencias Sociales.
  15. Jessie Handbury & David E. Weinstein, 2011. "Goods Prices and Availability in Cities," NBER Working Papers 17067, National Bureau of Economic Research, Inc.
  16. Davis, Morris A. & Palumbo, Michael G., 2008. "The price of residential land in large US cities," Journal of Urban Economics, Elsevier, vol. 63(1), pages 352-384, January.
  17. Gilles Duranton, 2008. "Viewpoint: From cities to productivity and growth in developing countries," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 41(3), pages 689-736, August.
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Cited by:
  1. Combes, Pierre-Philippe & Démurger, Sylvie & Li, Shi, 2013. "Urbanisation and Migration Externalities in China," CEPR Discussion Papers, C.E.P.R. Discussion Papers 9352, C.E.P.R. Discussion Papers.
  2. Behrens, Kristian & Duranton, Gilles & Robert-Nicoud, Frédéric, 2010. "Productive cities: Sorting, selection and agglomeration," CEPR Discussion Papers, C.E.P.R. Discussion Papers 7922, C.E.P.R. Discussion Papers.
  3. Stephen J. Redding & Matthew A. Turner, 2014. "Transportation Costs and the Spatial Organization of Economic Activity," CEP Discussion Papers dp1277, Centre for Economic Performance, LSE.
  4. Beaudry, Paul & Green, David A. & Sand, Benjamin M., 2014. "Spatial equilibrium with unemployment and wage bargaining: Theory and estimation," Journal of Urban Economics, Elsevier, vol. 79(C), pages 2-19.
  5. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, Elsevier, in: Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853 Elsevier.

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