Trade, Commuting and City Structure

Pol Cosentino

No 12557, CESifo Working Paper Series from CESifo

Abstract: Cities are places where people commute to work and where goods are traded across space. While a large literature examines how lower commuting costs reshape cities, much less is known about within-city trade costs as a distinct force. This paper studies both channels using the construction of the Petite Ceinture railroad in nineteenth-century Paris, the world's first circular transit system, designed for both freight and passengers. Using newly digitized data on firms, population, rents, and transport networks spanning 1801 to 1906, I provide causal evidence that improved access to the railroad reshaped the spatial distribution of economic activities during this period. To quantify general equilibrium effects, I develop and calibrate a quantitative urban model in which within-city freight costs generate spatial variation in tradable goods prices, creating consumption-driven forces at the residence absent from canonical models. Counterfactuals show that removing the railroad would substantially reduce total population, consumption of tradables, and spatial specialization. Ignoring within-city freight costs leads to a 17.1% underestimation of the effects of transport infrastructure on urban structure and welfare.

Keywords: commuting; trade; transport infrastructure; quantitative urban model (search for similar items in EconPapers)
JEL-codes: F12 R12 R13 R40 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-hre, nep-tre and nep-uep
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12557

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