Emergent Cities: A Microeconomic Explanation for Zipf's Law
AbstractA model of city formation and evolution is elaborated, based on a multi-agent model of endogenous firm formation. Agents have heterogeneous abilities, are boundedly rational, and interact directly with one another out of equilibrium in team production environments. Each agent works in a firm and each firm has a location. Agents periodically search for positions in other firms that would give them higher utility. Moves between firms are migrations when they involve changes in location. Agents can also start-up new firms if it is welfare-improving to do so. With high probability the location of a new firm is identical with the current location of its founder. However, there is a small chance that a new firm starts up in a different location, with the new location chosen at random. This makes it possible for new cities to occasionally emerge. Over time the movement of individuals across firms combines with the movement of firms across locations to yield clusters of agents and firms in particular locations, i.e., cities. It is demonstrated that under a wide range of conditions these locational clusters reproduce the so-called ÎZipf lawÌ for city sizes, i.e., a Pareto-distribution with exponent 1. This model also yields empirically-significant wage-city size effects, city growth rate distributions, and dependence of city growth rate variance on size. Apparently, this model constitutes the first microeconomic explanation of these phenomena.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoPaper provided by Society for Computational Economics in its series Computing in Economics and Finance 2001 with number 154.
Date of creation: 01 Apr 2001
Date of revision:
Contact details of provider:
Web page: http://www.econometricsociety.org/conference/SCE2001/SCE2001.html
More information through EDIRC
city formation; Zipf's law; agent-based model;
Find related papers by JEL classification:
- C0 - Mathematical and Quantitative Methods - - General
- D0 - Microeconomics - - General
- L0 - Industrial Organization - - General
- R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Kwok Tong Soo, 2004.
"Zipfs Law for Cities: A Cross Country Investigation,"
CEP Discussion Papers
dp0641, Centre for Economic Performance, LSE.
- Soo, Kwok Tong, 2005. "Zipf's Law for cities: a cross-country investigation," Regional Science and Urban Economics, Elsevier, vol. 35(3), pages 239-263, May.
- Mark Lorenzen & Kristina Vaarst Andersen, 2007. "The Geography of the European Creative Class A Rank-Size Analysis," DRUID Working Papers 07-17, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- Claes Andersson & Koen Frenken & Alexander Hellervik, 2006.
"A complex network approach to urban growth,"
Environment and Planning A,
Pion Ltd, London, vol. 38(10), pages 1941-1964, October.
- Cuberes, David, 2008.
"A Model of Sequential City Growth,"
8431, University Library of Munich, Germany.
- Xavier Gabaix & Yannis M. Ioannides, 2003.
"The Evolution of City Size Distributions,"
Discussion Papers Series, Department of Economics, Tufts University
0310, Department of Economics, Tufts University.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.