The evolution of municipal structure

In most US states, urban expansions are governed by ‘popular determination’, under which residents make annexation decisions through referendum. Yet little research analyzes how urban spatial structure evolves under this system. We develop a model to examine how urban residents’ collective decisions on annexations and property taxes and their interactions with agricultural landowners affect municipal structure under popular determination. We find that the evolution process of an urban area can be divided into four stages similar to human life stages (infancy, juvenile, adulthood and maturity), characterized by the pace of development. The key parameters that determine urban spatial structure include agricultural rents, construction costs, interest rate, and the rate and uncertainty of income growth. Cities tend to be more spread-out and consist of a large number of smaller municipalities, in regions with lower agricultural land rents, lower construction costs, and lower rate and uncertainty of income growth.