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A Model of Sequential City Growth

  • Cuberes, David
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    There is strong evidence showing that in most countries cities develop sequentially, with the initially largest city being the first to grow. This paper presents a growth model of optimal city size that rationalizes this particular growth pattern. Increasing returns to scale is the force that favors agglomeration of resources in a city, and convex costs associated with the stock of installed capital represent the congestion force that limits city size. The key to generate sequential growth is the assumption of irreversible investment in physical capital. The presence of a positive external effect of aggregate city capital on individual firms makes the competitive equilibrium inefficient.

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    File URL: https://mpra.ub.uni-muenchen.de/2172/1/MPRA_paper_2172.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2172.

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    Date of creation: 2007/02/16
    Handle: RePEc:pra:mprapa:2172
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    1. 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.
    2. Wang, Ping, 1990. "Competitive equilibrium formation of marketplaces with heterogeneous consumers," Regional Science and Urban Economics, Elsevier, vol. 20(3), pages 295-304, November.
    3. J.V. Henderson, 1972. "The Sizes and Types of Cities," Working Papers 75, Queen's University, Department of Economics.
    4. Wang, Ping, 1993. "Agglomeration in a linear city with heterogeneous households," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 291-306, April.
    5. Grossman, G.M. & Helpman, E., 1989. "Quality Ledders In The Theory Of Growth," Papers 148, Princeton, Woodrow Wilson School - Public and International Affairs.
    6. Gabaix, Xavier & Ioannides, Yannis M., 2004. "The evolution of city size distributions," 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 53, pages 2341-2378 Elsevier.
    7. Duranton, Gilles, 2002. "City Size Distributions as a Consequence of the Growth Process," CEPR Discussion Papers 3577, C.E.P.R. Discussion Papers.
    8. Tamura, Robert, 2006. "Human capital and economic development," Journal of Development Economics, Elsevier, vol. 79(1), pages 26-72, February.
    9. Esteban Rossi-Hansberg & Mark L. J. Wright, 2007. "Urban Structure and Growth," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 597-624.
    10. Kwok Tong Soo, 2004. "Zipf's law for cities: a cross country investigation," LSE Research Online Documents on Economics 19947, London School of Economics and Political Science, LSE Library.
    11. J.V. Henderson & A.J. Venables, 2006. "The Dynamics of City Formation: Finance and Governance," 2006 Meeting Papers 224, Society for Economic Dynamics.
    12. Brezis, Elise S & Krugman, Paul R, 1997. "Technology and the Life Cycle of Cities," Journal of Economic Growth, Springer, vol. 2(4), pages 369-83, December.
    13. Ioannides, Yannis M. & Overman, Henry G., 2003. "Zipf's law for cities: an empirical examination," Regional Science and Urban Economics, Elsevier, vol. 33(2), pages 127-137, March.
    14. Eaton, Jonathan & Eckstein, Zvi, 1997. "Cities and growth: Theory and evidence from France and Japan," Regional Science and Urban Economics, Elsevier, vol. 27(4-5), pages 443-474, August.
    15. Tamura, Robert, 2002. "Human capital and the switch from agriculture to industry," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 207-242, December.
    16. Xavier Gabaix, 1999. "Zipf's Law for Cities: An Explanation," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 739-767.
    17. Edward L. Glaeser & Jose A. Scheinkman & Andrei Shleifer, 1995. "Economic Growth in a Cross-Section of Cities," NBER Working Papers 5013, National Bureau of Economic Research, Inc.
    18. repec:hoo:wpaper:e-95-4 is not listed on IDEAS
    19. Jan Eeckhout, 2004. "Gibrat's Law for (All) Cities," American Economic Review, American Economic Association, vol. 94(5), pages 1429-1451, December.
    20. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    21. Rosen, Kenneth T. & Resnick, Mitchel, 1980. "The size distribution of cities: An examination of the Pareto law and primacy," Journal of Urban Economics, Elsevier, vol. 8(2), pages 165-186, September.
    22. Xavier Gabaix, 1999. "Zipf's Law and the Growth of Cities," American Economic Review, American Economic Association, vol. 89(2), pages 129-132, May.
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