Munich Personal RePEc Archive

A Model of Sequential City Growth

Cuberes, David (2008): A Model of Sequential City Growth.

[img]
Preview
PDF
MPRA_paper_8431.pdf

Download (281kB) | Preview

Abstract

There is strong evidence showing that in most countries cities develop sequentially, with the initially largest cities being the first to grow. This paper presents a growth model of optimal city size that rationalizes this 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.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.