Agglomeration economies, types, and sizes of cities

Article Abstract:

A study of the economies of two hypothetical cities to determine why cities are different sizes, reveals that a city with industries producing multiple traded products can be larger than a city in stable equilibrium with specialized industries producing one traded product only if a portion of the industries' multiple production functions manifests decreasing returns at some point. Without this manifestation, the city with specialized production will be larger than the diversified city in stable equilibrium. Research results also suggest that the equilibrium city size can be stable even if the specialized production function shows increasing returns. Additionally, results indicate urbanization economies are the dominant agglomeration force in the city with multiple traded products, and the dominant force in the single-product city results from localization economies.

Urban economics, Externalities (Economics), Equilibrium (Economics), Elasticity (Economics), Municipal research

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Specialization and diversification in a system of cities

Article Abstract:

A general equilibrium model of a closed economy made up of a system of cities is constructed to shed light on the causes of specialization and diversification. The model is characterized by the production of two goods and by zero transporation costs. The conditions for the three possible equilibrium configurations are analyzed. Pure diversification, or the production of both goods by all cities within the system, results from economies of joint production, while city specialization in either good results from the existence of fixed production costs that give rise to internal scale economies. Economic coexistence of specialized and diversified cities is a consequence of the structural variation in industries among cities. Finally, the conditions derived elsewhere for the formation of multiproduct firms cannot be applied to the formation of multiproduct cities.

Economic aspects, Cities and towns, Diversification in industry, Industrial diversification

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Social welfare and income inequality in a system of cities

Article Abstract:

A general-equilibrium model of a system of core-periphery cities was developed to determine the primary factors affecting intra-regional and inter-regional income variances. This framework includes an analytical description of city size and a two-level hierarchical spatial structure in the context of heterogeneous labor. Also, it allows for a non-symmetric Nash wage bargain allowing intra-regional income disparity. It also looks at the welfare consequences of geographical and economic shifts resulting in greater income inequalities. Findings revealed the existence of both intra-regional and inter-regional income variances. Results indicated that public policy programs enhancing income equality may not automatically be a positive force for welfare.

Analysis, Social services, Social service, Welfare, Public assistance, Income distribution

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