The Optimal distribution of population across cities

The Optimal distribution of population across cities

We develop an urban model that incorporates: (1) heterogeneous sites; (2) fiscal and urban externalities; and (3) an endogenous number of cities, i.e., the extensive margin of urban development. Within- and across-city decreasing returns to scale cause agents to perceive their city as being too large in the socially optimal allocation. As a consequence, in equilibrium the largest cities on the most amenable sites are undersized, whereas the smaller cities on less amenable sites are oversized. We propose a test for optimal city size with heterogeneous sites extending the Henry George Theorem.

David Albouy, Kristian Behrens ,Frédéric Robert-Nicoud, and Nathan Seegert

Journal of Urban Economics

March 2019

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By |2019-03-19T12:28:03-07:00January 1st, 2018|Affordability, Reference, Reforms|