Cities in Space: Three Simple Models, Issue 3607
Urban agglomerations arise at least in part out of the interaction between economies of scale in production and market size effects. This paper develops a simple spatial framework to develop illustrative models of the determinants of urban location, of the number and size of cities, and of the degree of urbanization. A Central theme is the probable existence of multiple equilibria, and the dependence of the range of potential outcomes on a few key parameters.
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1050 Massachusetts Avenue agricultural population Angrist Alan average distance Bureau of Economic Business Cycle CITIES IN SPACE city location cost of shipping degree of urbanization Economic Research economies of scale eira ends up concentrated equilibrium as long F per production F+c2x+ farmers lie fewer cities fixed cost F income and substitution Increasing returns incur transport costs insight interaction between economies Krueger location is proportional location of demand location of production location that minimizes location theory manufacturing production market size effects microeconomic minimizes transport costs minimum number multiple equilibria National Bureau Notes on Economic number and size number of cities optimal location PAPER SERIES CITIES Paul Krugman population density potential city sites production of manufactures proportional to employment range of potential rural market Shleifer size of cities substitution effects THREE SIMPLE MODELS Transport cost Figure Urban agglomerations arise urban center urban location Vishny Xavier Sala-i-Martin zmin