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A Model of Sequential City Growth

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  • Cuberes, David

Abstract

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.

Suggested Citation

  • Cuberes, David, 2007. "A Model of Sequential City Growth," MPRA Paper 2172, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:2172
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    File URL: https://mpra.ub.uni-muenchen.de/2172/1/MPRA_paper_2172.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    cities; Gibrat's law; increasing returns; congestion costs;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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