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The Costs of Agglomeration: Land Prices in French Cities

  • Pierre-Philippe Combes


    (AMSE - Aix-Marseille School of Economics - EHESS - École des hautes études en sciences sociales - Centre national de la recherche scientifique (CNRS) - Ecole Centrale Marseille (ECM) - AMU - Aix-Marseille Université)

  • Gilles Duranton


    (Wharton School, University of Pennsylvania - University of Pennsylvania)

  • Laurent Gobillon


    (INED - Institut national d'études démographiques, PSE - Paris-Jourdan Sciences Economiques - CNRS - Institut national de la recherche agronomique (INRA) - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics)

We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French land price data. Our preferred estimate, which handles a number of estimation concerns, stands at 0.041. Our approach also yields a number of intermediate outputs of independent interest such as a distance gradient for land prices and the elasticity of unit land prices with respect to city population. For the latter, our preferred estimate is 0.72.

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Paper provided by HAL in its series PSE Working Papers with number halshs-00793632.

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Date of creation: Nov 2012
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Handle: RePEc:hal:psewpa:halshs-00793632
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  1. Duranton, Gilles & Puga, Diego, 2001. "From Sectoral to Functional Urban Specialization," CEPR Discussion Papers 2971, C.E.P.R. Discussion Papers.
  2. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon, 2011. "The Identification of Agglomeration Economies," Post-Print halshs-00754555, HAL.
  3. J.V. Henderson, 1972. "The Sizes and Types of Cities," Working Papers 75, Queen's University, Department of Economics.
  4. PierrePhilippe Combes & Gilles Duranton & Laurent Gobillon & Diego Puga & Sébastien Roux, 2009. "The Productivity Advantages of Large Cities: Distinguishing Agglomeration from Firm Selection," SERC Discussion Papers 0027, Spatial Economics Research Centre, LSE.
  5. Rappaport, Jordan, 2007. "Moving to nice weather," Regional Science and Urban Economics, Elsevier, vol. 37(3), pages 375-398, May.
  6. Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627.
  7. Davis, Morris A. & Heathcote, Jonathan, 2007. "The price and quantity of residential land in the United States," Journal of Monetary Economics, Elsevier, vol. 54(8), pages 2595-2620, November.
  8. Paul Cheshire & Stefano Magrini, 2006. "Population growth in European cities: Weather matters - but only nationally," Regional Studies, Taylor & Francis Journals, vol. 40(1), pages 23-37.
  9. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 549-576.
  10. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
  11. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent & Roux, Sébastien, 2008. "Estimating Agglomeration Economies with History, Geology, and Worker Effects," CEPR Discussion Papers 6728, C.E.P.R. Discussion Papers.
  12. Jessie Handbury & David E. Weinstein, 2015. "Goods Prices and Availability in Cities," Review of Economic Studies, Oxford University Press, vol. 82(1), pages 258-296.
  13. Henderson, Vernon, 2002. "Urban primacy, external costs, and quality of life," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 95-106, February.
  14. David Albouy & Gabriel Ehrlich, 2012. "Metropolitan Land Values and Housing Productivity," NBER Working Papers 18110, National Bureau of Economic Research, Inc.
  15. Gilles Duranton, 2008. "Viewpoint: From cities to productivity and growth in developing countries," Canadian Journal of Economics, Canadian Economics Association, vol. 41(3), pages 689-736, August.
  16. Morris A. Davis & Michael G. Palumbo, 2006. "The price of residential land in large U.S. cities," Finance and Economics Discussion Series 2006-25, Board of Governors of the Federal Reserve System (U.S.).
  17. Morris A. Davis & Jonathan Heathcote, 2005. "Housing And The Business Cycle," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 751-784, 08.
  18. David Card & Alan B. Krueger, 1991. "School Quality and Black-White Relative Earnings: A Direct Assessment," NBER Working Papers 3713, National Bureau of Economic Research, Inc.
  19. Gilles Duranton, 2007. "From cities to productivity and growth in developing countries," Working Papers tecipa-306, University of Toronto, Department of Economics.
  20. Richardson, Harry W, 1987. "The Costs of Urbanization: A Four-Country Comparison," Economic Development and Cultural Change, University of Chicago Press, vol. 35(3), pages 561-80, April.
  21. Gerald Carlino, 2009. "Beautiful city," Business Review, Federal Reserve Bank of Philadelphia, issue Q3, pages 10-17.
  22. Diego Puga, 2010. "The Magnitude And Causes Of Agglomeration Economies," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 203-219.
  23. France Guérin-Pace & Denise Pumain, 1990. "150 ans de croissance urbaine," Économie et Statistique, Programme National Persée, vol. 230(1), pages 5-16.
  24. Morris A. Davis & Francois Ortalo-Magne, 2011. "Household Expenditures, Wages, Rents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(2), pages 248-261, April.
  25. Alan B. Krueger, 2009. "Measuring the Subjective Well-Being of Nations: National Accounts of Time Use and Well-Being," NBER Books, National Bureau of Economic Research, Inc, number krue08-1, July.
  26. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, April.
  27. Thomas, Vinod, 1980. "Spatial differences in the cost of living," Journal of Urban Economics, Elsevier, vol. 8(1), pages 108-122, July.
  28. Fujita, Masahisa & Ogawa, Hideaki, 1982. "Multiple equilibria and structural transition of non-monocentric urban configurations," Regional Science and Urban Economics, Elsevier, vol. 12(2), pages 161-196, May.
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