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Formation of Hub Cities: Transportation Cost Advantage and Population Agglomeration

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  • Konishi, Hideo

Abstract

Many cities are located on rivers or coasts. This paper argues that such cities developed as transportation hubs or markets for interregional trade, since these locations provide better access (lower marginal transportation costs) to other regions. Local products are collected at such hubs, and interregional trade then takes place among these transportation hubs. As the volume of trade between hubs increases, more workers are needed in order to meet labor demand for shipping and handling commodities, resulting in population agglomeration at such hubs. This paper constructs a simple three location-identical consumer model, in which transportation hub and population agglomeration emerge endogenously. In contrast with much of the literature on city formation, we introduce no economies of scale into the model. Markets are assumed to be perfectly competitive and complete. Since prices are determined in equilibrium, transportation costs and routes are simultaneously determined in the system. Population agglomeration occurs solely because of location-specific production technologies (which generates gains from trade) and the differences in transportation technologies among locations (which determines the transportation routes). It is shown that a hub city emerges when transportation technologies are heterogeneous enough.
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  • Konishi, Hideo, 2000. "Formation of Hub Cities: Transportation Cost Advantage and Population Agglomeration," Journal of Urban Economics, Elsevier, vol. 48(1), pages 1-28, July.
  • Handle: RePEc:eee:juecon:v:48:y:2000:i:1:p:1-28
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    Cited by:

    1. Tomoya Mori, 2017. "Agglomeration," KIER Working Papers 960, Kyoto University, Institute of Economic Research.
    2. Daniel P. McMillen, 2003. "Employment subcenters in Chicago: past, present, and future," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 2-14.
    3. Cuberes David, 2009. "A Model of Sequential City Growth," The B.E. Journal of Macroeconomics, De Gruyter, vol. 9(1), pages 1-41, May.
    4. Michihiro Kandori, 2010. "2009 Jea-Nakahara Prize Announcement," The Japanese Economic Review, Japanese Economic Association, vol. 61(1), pages 33-34.
    5. BEHRENS, Kristian, 2003. "Asymmetric trade and agglomeration," LEG - Document de travail - Economie 2003-10, LEG, Laboratoire d'Economie et de Gestion, CNRS, Université de Bourgogne.
    6. repec:eee:retrec:v:61:y:2017:i:c:p:2-14 is not listed on IDEAS
    7. Miquel-Ángel Garcia-López & Ilias Pasidis & Elisabet Viladecans-Marsal, 2015. "Express delivery to the suburbs. The effects of transportation in Europe’s heterogeneous cities," Working Papers 2015/30, Institut d'Economia de Barcelona (IEB).
    8. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics,in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
    9. Bosker, Maarten & Buringh, Eltjo, 2017. "City seeds: Geography and the origins of the European city system," Journal of Urban Economics, Elsevier, vol. 98(C), pages 139-157.
    10. McMillen, Daniel P. & Smith, Stefani C., 2003. "The number of subcenters in large urban areas," Journal of Urban Economics, Elsevier, vol. 53(3), pages 321-338, May.
    11. Kristian Behrens, 2003. "Localisation et endogénéité des structures d'échanges," Working Papers hal-01545577, HAL.
    12. repec:ebl:ecbull:v:18:y:2002:i:1:p:1-11 is not listed on IDEAS
    13. Cuberes, David, 2007. "A Model of Sequential City Growth," MPRA Paper 2172, University Library of Munich, Germany.
    14. César Ducruet & Hidekazu Itoh & Olivier Joly, 2015. "Ports and the local embedding of commodity flows," Papers in Regional Science, Wiley Blackwell, vol. 94(3), pages 607-627, August.
    15. Sukkoo Kim, 2002. "The Reconstruction of the American Urban Landscape in the Twentieth Century," NBER Working Papers 8857, National Bureau of Economic Research, Inc.
    16. Munetomo Ando & Daisuke Oyama, 2002. "A model of a spatial economy with trading posts," Economics Bulletin, AccessEcon, vol. 18(1), pages 1-11.
    17. Tsekeris, Theodore, 2016. "Interregional trade network analysis for road freight transport in Greece," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 85(C), pages 132-148.
    18. Akio Kawasaki, 2012. "Hub location with scheduling effects in a monopoly airline market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(3), pages 805-819, December.
    19. Ari-Veikko Anttiroiko, 2015. "City Branding as a Response to Global Intercity Competition," Growth and Change, Wiley Blackwell, vol. 46(2), pages 233-252, June.
    20. repec:eee:trapol:v:60:y:2017:i:c:p:24-33 is not listed on IDEAS

    More about this item

    JEL classification:

    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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