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Intercity Trade and Convergent versus Divergent Urban Growth

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Author Info
Yannis M. Ioannides

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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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Publisher 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. Yannis M. Ioannides & Henry G. Overman, 2004. "Spatial evolution of the US urban system," Journal of Economic Geography, Oxford University Press, vol. 4(2), pages 131-156, April.
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  2. Esteban Rossi-Hansberg & Mark L. J. Wright, 2007. "Urban Structure and Growth," Review of Economic Studies, Blackwell Publishing, vol. 74(2), pages 597-624, 04. [Downloadable!] (restricted)
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  3. Ventura, Jaume, 2005. "Global View of Economic Growth," CEPR Discussion Papers 5059, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  4. 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. [Downloadable!] (restricted)
  5. Alex Anas & Kai Xiong, 2003. "Intercity Trade and the Industrial Diversification of Cities," Urban/Regional 0302003, EconWPA. [Downloadable!]
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