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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. Morris A. Davis & Michael G. Palumbo, 2006. "The price of residential land in large U.S. cities," Finance and Economics Discussion Series 2006-25, Board of Governors of the Federal Reserve System (U.S.).
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  3. Morris A. Davis & François Ortalo-Magné, 2007. "Household Expenditures, Wages, Rents," CESifo Working Paper Series 2156, CESifo Group Munich.
  4. Gilles Duranton & Diego Puga, 2002. "From Sectoral to Functional Urban Specialization," NBER Working Papers 9112, National Bureau of Economic Research, Inc.
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  7. Morris A. Davis, 2010. "housing and the business cycle," The New Palgrave Dictionary of Economics, Palgrave Macmillan.
  8. Card, David & Krueger, Alan B, 1992. "School Quality and Black-White Relative Earnings: A Direct Assessment," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 151-200, February.
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  10. Jordan Rappaport, 2003. "Moving to nice weather," Research Working Paper RWP 03-07, Federal Reserve Bank of Kansas City.
  11. Jessie Handbury & David E. Weinstein, 2011. "Goods Prices and Availability in Cities," NBER Working Papers 17067, National Bureau of Economic Research, Inc.
  12. 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.
  13. David Albouy & Gabriel Ehrlich, 2012. "Metropolitan Land Values and Housing Productivity," NBER Working Papers 18110, National Bureau of Economic Research, Inc.
  14. Gilles Duranton, 2008. "Viewpoint: From cities to productivity and growth in developing countries," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 689-736, August.
  15. Richardson, Harry W, 1987. "The Costs of Urbanization: A Four-Country Comparison," Economic Development and Cultural Change, University of Chicago Press, vol. 35(3), pages 561-80, April.
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  17. Henderson, Vernon, 2002. "Urban primacy, external costs, and quality of life," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 95-106, February.
  18. Denise Pumain & France Guérin-Pace, 1990. "150 ans de croissance urbaine," Économie et Statistique, Programme National Persée, vol. 230(1), pages 5-16.
  19. Diego Puga, 2010. "The Magnitude And Causes Of Agglomeration Economies," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 203-219.
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Cited by:
  1. 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.
  2. Kristian Behrens & Gilles Duranton & Frédéric Robert-Nicoud, 2013. "Productive cities: Sorting, selection, and agglomeration," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 13111, Institut d'Economie et Econométrie, Université de Genève.
  3. 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.
  4. Pierre-Philippe Combes & Sylvie Démurger & Shi Li, 2013. "Urbanisation and Migration Externalities in China," Working Papers 1303, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  5. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853 Elsevier.

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