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Optimum City Size: The External Diseconomy Question

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  • Henderson, J V

Abstract

This paper discusses whether market-achieved city size is greater or less than optimum city size. The divergence between optimum and achieved city size is due to external diseconomies such as pollution. Imposing an optimal tax on pollution may not, as is commonly thought, cause even an initial reduction in output of the polluting good. Moreover, the paper shows, even if output initially falls with optimal taxation, the corresponding reduction in pollution and shift toward consumption of non-polluting goods will make city inhabitants better off. The increased welfare of city inhabitants will result in immigration to the city.
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Suggested Citation

  • Henderson, J V, 1974. "Optimum City Size: The External Diseconomy Question," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 373-388, Part I, M.
  • Handle: RePEc:ucp:jpolec:v:82:y:1974:i:2:p:373-88
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    Cited by:

    1. Hiroki Watanabe, 2015. "A Spatial Production Economy Explains Gross Metropolitan Product," ERSA conference papers ersa15p30, European Regional Science Association.
    2. Castells-Quintana, David, 2017. "Malthus living in a slum: Urban concentration, infrastructure and economic growth," Journal of Urban Economics, Elsevier, vol. 98(C), pages 158-173.
    3. Juan Cordoba, 2013. "Supply Side Structural Change," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 3(1), pages 8-38, June.
    4. Lee, Sanghoon, 2010. "Ability sorting and consumer city," Journal of Urban Economics, Elsevier, vol. 68(1), pages 20-33, July.
    5. repec:kbb:dpaper:2012-19 is not listed on IDEAS
    6. Sinai, Todd & Waldfogel, Joel, 2004. "Geography and the Internet: is the Internet a substitute or a complement for cities?," Journal of Urban Economics, Elsevier, vol. 56(1), pages 1-24, July.
    7. Ayer, Harry W. & Weidman, Joe, 1976. "The Rural Town As A Producing Unit: An Empirical Analysis And Implications For Rural Development Policy," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 8(02), December.

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