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Intercity Trade and Convergent versus Divergent Urban Growth

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  • Yannis M. Ioannides

Abstract

The paper studies intercity trade and growth in an overlapping-generations economy where tradeable goods are produced using a composite of capital, raw labor and intermediates, and are combined in each city to produce a composite. The composite is used for consumption and investment. Tax-financed investment that affects commuting costs endogenizes city size. A combination of weak (strong) diminishing returns and strong (weak) market size effects can lead to increasing (decreasing) returns to scale. Autarkic urban growth may be parallel or divergent. Capital growth in the integrated economy has the same dynamic properties as its counterpart for an economy with autarkic cities but leads to national constant returns to scale.

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File URL: http://ase.tufts.edu/econ/research/documents/2008/ioannidesTrade.pdf
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Bibliographic Info

Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0723.

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Date of creation: 2008
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Handle: RePEc:tuf:tuftec:0723

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  1. Jaume Ventura, 2005. "A global view of economic growth," Economics Working Papers 849, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Jonathan Eaton & Zvi Eckstein, 1994. "Cities and Growth: Theory and Evidence from france and Japan," Boston University - Institute for Economic Development 36, Boston University, Institute for Economic Development.
  3. Ioannides, Yannis M., 1994. "Product differentiation and economic growth in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 24(4), pages 461-484, August.
  4. Yannis Ioannides & Henry G. Overman, 2000. "Spatial evolution of the US urban system," LSE Research Online Documents on Economics 20138, London School of Economics and Political Science, LSE Library.
  5. Marcus Berliant & Ping Wang, 2004. "Dynamic Urban Models: Agglomeration and Growth," Urban/Regional 0404006, EconWPA.
  6. Henderson, J. Vernon & Ioannides, Yannis M., 1981. "Aspects of growth in a system of cities," Journal of Urban Economics, Elsevier, vol. 10(1), pages 117-139, July.
  7. Esteban Rossi-Hansberg & Mark L.J. Wright, 2005. "Urban Structure and Growth," NBER Working Papers 11262, National Bureau of Economic Research, Inc.
  8. Duncan Black & Vernon Henderson, 1997. "Urban Growth," NBER Working Papers 6008, National Bureau of Economic Research, Inc.
  9. Jaume Ventura, 2005. "A Global View of Economic Growth," Working Papers 203, Barcelona Graduate School of Economics.
  10. Anas, Alex & Xiong, Kai, 2003. "Intercity trade and the industrial diversification of cities," Journal of Urban Economics, Elsevier, vol. 54(2), pages 258-276, September.
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