The Economics of Density: Evidence from the Berlin Wall

Stephen Redding, Daniel Sturm, Nikolaus Wolf and Gabriel Ahlfeldt

No 10097, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper develops a quantitative model of internal city structure that features agglomeration and dispersion forces and an arbitrary number of heterogeneous city blocks. The model remains tractable and amenable to empirical analysis because of stochastic shocks to commuting decisions, which yield a gravity equation for commuting flows. To structurally estimate agglomeration and dispersion forces, we use data on thousands of city blocks in Berlin for 1936, 1986 and 2006 and exogenous variation from the city's division and reunification. We estimate substantial and highly localized production and residential externalities. We show that the model with the estimated agglomeration parameters can account both qualitatively and quantitatively for the observed changes in city structure.

Keywords: Agglomeration; Cities; Commuting; Density; Gravity (search for similar items in EconPapers)
JEL-codes: N34 O18 R12 (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-geo, nep-his and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

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Related works:
Journal Article: The Economics of Density: Evidence From the Berlin Wall (2015)
Working Paper: The economics of density: evidence from the Berlin Wall (2015)
Working Paper: The Economics of Density: Evidence from the Berlin Wall (2014)
Working Paper: The Economics of Density: Evidence from the Berlin Wall (2013)
Working Paper: The Economics of Density: Evidence from the Berlin Wall (2012)
Working Paper: The Economics of Density: Evidence from the Berlin Wall (2012)
Working Paper: The economics of density: evidence from the Berlin wall (2012)
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