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Optimum City Size: The External Diseconomy Question

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  • J.V. Henderson

    (Queen's University)

Abstract

This paper discusses whether market-achieved city size is greater or less than optimum city size. The divergence between optimum and achieved city size is due to external diseconomies such as pollution. Imposing an optimal tax on pollution may not, as is commonly thought, cause even an initial reduction in output of the polluting good. Moreover, the paper shows, even if output initially falls with optimal taxation, the corresponding reduction in pollution and shift toward consumption of non-polluting goods will make city inhabitants better off. The increased welfare of city inhabitants will result in immigration to the city.

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File URL: http://qed.econ.queensu.ca/working_papers/papers/qed_wp_91.pdf
File Function: First version 1972
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Bibliographic Info

Paper provided by Queen's University, Department of Economics in its series Working Papers with number 91.

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Length: 31 pages
Date of creation: Aug 1972
Date of revision:
Handle: RePEc:qed:wpaper:91

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Cited by:
  1. Ayer, Harry W. & Weidman, Joe, 1976. "The Rural Town As A Producing Unit: An Empirical Analysis And Implications For Rural Development Policy," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 8(02), December.
  2. Lee, Sanghoon, 2010. "Ability sorting and consumer city," Journal of Urban Economics, Elsevier, vol. 68(1), pages 20-33, July.
  3. Fumitoshi Mizutani & Tomoyasu Tanaka & Noriyoshi Nakayama, 2012. "Estimation of Optimal Metropolitan Size in Japan with Consideration of Social Costs," Discussion Papers 2012-19, Kobe University, Graduate School of Business Administration.

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