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A Model of Sequential City Growth

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Author Info
Cuberes, David

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Abstract

There is strong evidence showing that in most countries cities develop sequentially, with the initially largest cities being the first to grow. This paper presents a growth model of optimal city size that rationalizes this growth pattern. Increasing returns to scale is the force that favors agglomeration of resources in a city, and convex costs associated with the stock of installed capital represent the congestion force that limits city size. The key to generate sequential growth is the assumption of irreversible investment in physical capital. The presence of a positive external effect of aggregate city capital on individual firms makes the competitive equilibrium inefficient.

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File URL: http://mpra.ub.uni-muenchen.de/8431/
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8431.

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Date of creation: 16 Feb 2008
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Handle: RePEc:pra:mprapa:8431

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Related research
Keywords: City Growth; Increasing Returns; Congestion Costs;

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Find related papers by JEL classification:
N90 - Economic History - - Regional and Urban History - - - General, International, or Comparative
O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
R12 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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  18. Konishi, Hideo, 2000. "Formation of Hub Cities: Transportation Cost Advantage and Population Agglomeration," Journal of Urban Economics, Elsevier, vol. 48(1), pages 1-28, July. [Downloadable!] (restricted)
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  19. Xavier Gabaix, 1999. "Zipf'S Law For Cities: An Explanation," The Quarterly Journal of Economics, MIT Press, vol. 114(3), pages 739-767, August. [Downloadable!] (restricted)
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  21. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," 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 48, pages 2063-2117 Elsevier. [Downloadable!] (restricted)
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  22. Duncan Black & Vernon Henderson, 1999. "A Theory of Urban Growth," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 252-284, April. [Downloadable!] (restricted)
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