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The optimal distribution of population across cities

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  • Albouy, David
  • Behrens, Kristian
  • Robert-Nicoud, Frédéric
  • Seegert, Nathan

Abstract

We develop an urban model that incorporates: (1) heterogeneous sites; (2) fiscal and urban externalities; and (3) an endogenous number of cities, i.e., the extensive margin of urban development. Within- and across-city decreasing returns to scale cause agents to perceive their city as being too large in the socially optimal allocation. As a consequence, in equilibrium the largest cities on the most amenable sites are undersized, whereas the smaller cities on less amenable sites are oversized. We propose a test for optimal city size with heterogeneous sites extending the Henry George Theorem.

Suggested Citation

  • Albouy, David & Behrens, Kristian & Robert-Nicoud, Frédéric & Seegert, Nathan, 2019. "The optimal distribution of population across cities," Journal of Urban Economics, Elsevier, vol. 110(C), pages 102-113.
  • Handle: RePEc:eee:juecon:v:110:y:2019:i:c:p:102-113
    DOI: 10.1016/j.jue.2018.08.004
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    More about this item

    Keywords

    Optimal and equilibrium city sizes; Fiscal wedges; Local governments; Henry George Theorem;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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