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Vanishing Cities: What Does the New Economic Geography Imply About the Efficiency of Urbanization?

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  • Alex Anas

    (State University of New York at Buffalo)

Abstract

How should the size and number of cities evolve optimally as population grows? Stripped of the constraints of geography itself, the setup of the New Economic Geography implies that de-agglomeration (or de- urbanization) is efficient. The number of cities increases while the size of each decreases on the optimal path until the economy suddenly disperses to tiny towns of stand-alone firms each specializing in a unique good. The cause of this narrow result is the NEG’s strong emphasis on intercity trade to satisfy the taste for more goods. For the same aggregate population, a system of smaller cities saves time lost in commuting, has a larger labor supply and makes more goods than does a system of larger cities. Falling interurban trading costs favor this de- urbanization process. Only if intraurban commuting costs fall sufficiently, can a pattern of growing city sizes be efficient with growing population. Of course, when the number of cities or the geographic space itself is limited or asymmetric, then agglomeration can arise as an artifact of the constraints imposed by geography as demonstrated by numerous NEG models. This reveals that the central agglomerative force in the NEG is space itself and not the underlying economic relations.

Suggested Citation

  • Alex Anas, 2003. "Vanishing Cities: What Does the New Economic Geography Imply About the Efficiency of Urbanization?," Urban/Regional 0302005, EconWPA.
  • Handle: RePEc:wpa:wuwpur:0302005
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    References listed on IDEAS

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    Cited by:

    1. Murata, Yasusada & Thisse, Jacques-Francois, 2005. "A simple model of economic geography a la Helpman-Tabuchi," Journal of Urban Economics, Elsevier, vol. 58(1), pages 137-155, July.
    2. Berliant, Marcus & Yu, Chia-Ming, 2013. "Rational expectations in urban economics," Regional Science and Urban Economics, Elsevier, vol. 43(2), pages 197-208.
    3. Pierre Picard & Takatoshi Tabuchi, 2010. "Self-organized agglomerations and transport costs," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 42(3), pages 565-589, March.
    4. repec:bla:ijethy:v:13:y:2017:i:1:p:113-145 is not listed on IDEAS
    5. PICARD, Pierre & TABUCHI, Takatoshi, 2003. "Natural agglomeration," CORE Discussion Papers 2003101, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. Kiyohiro Ikeda & Kazuo Murota & Takashi Akamatsu & Yuki Takayama, 2017. "Agglomeration patterns in a long narrow economy of a new economic geography model: Analogy to a racetrack economy," International Journal of Economic Theory, The International Society for Economic Theory, vol. 13(1), pages 113-145, March.
    7. Berliant, Marcus & Wang, Ping, 2008. "Urban growth and subcenter formation: A trolley ride from the Staples Center to Disneyland and the Rose Bowl," Journal of Urban Economics, Elsevier, vol. 63(2), pages 679-693, March.
    8. Westin, Kerstin & Sandow, Erika, 2010. "People’s preferences for commuting in sparsely populated areas: The case of Sweden," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 2(3), pages 87-107.
    9. repec:hrs:journl:v:ix:y:2017:i:2:p:147-158 is not listed on IDEAS
    10. Levinson, David & Xie, Feng, 2011. "Does First Last? The Existence and Extent of First Mover Advantages on Spatial Networks," The Journal of Transport and Land Use, Center for Transportation Studies, University of Minnesota, vol. 4(2), pages 47-69.
    11. Maxim Goryunov & Sergey Kokovin, 2016. "‘Vanishing cities’: Can urban costs explain deindustrialization?," Papers in Regional Science, Wiley Blackwell, vol. 95(3), pages 633-651, August.
    12. Stefan Gruber, 2010. "To Migrate or to Commute?," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 2(1), pages 110-134, January.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • 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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