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Externalities, Nonconvexity, and Agglomeration

Author

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  • Papageorgiou, Y.
  • Pines, D.

Abstract

In this paper we argue that the impact of external scale economies and diseconomies on city size is not nearly as clear-cut as it is tacitly believed in urban economics. Similarly, that city-size distortions are not caused by externalities alone. Noncovexity, which prevents establishing the 'right' number of cities, may represent a source for city-size distortions which can be stronger than the standard resource misallocation resulting from external scale economies and diseconomies. It follows that a direct population dispersion policy is not just an inferior substitute to Pigovian taxes and subsidies but rather a useful complement.

Suggested Citation

  • Papageorgiou, Y. & Pines, D., 1999. "Externalities, Nonconvexity, and Agglomeration," Papers 17-99, Tel Aviv.
  • Handle: RePEc:fth:teavfo:17-99
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    References listed on IDEAS

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    Keywords

    EXTERNALITIES ; AGGLOMERATION ; TAXATION;

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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