The economics of density: evidence from the Berlin Wall

Gabriel Ahlfeldt, Stephen Redding, Daniel Sturm and Nikolaus Wolf

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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. We show how our quantitative framework can be used to undertake counterfactuals for changes in the organization of economic activity within cities in response for example to changes in the transport network.

Keywords: agglomeration; cities; commuting; density; gravity (search for similar items in EconPapers)
JEL-codes: N34 O18 R12 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2015-11
New Economics Papers: this item is included in nep-geo, nep-his and nep-ure
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Citations: View citations in EconPapers (398)

Published in Econometrica, November, 2015, 83(6), pp. 2127 - 2189. ISSN: 0012-9682

Downloads: (external link)
http://eprints.lse.ac.uk/61152/ Open access version. (application/pdf)

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 (2014)
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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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:61152

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