Competition, land prices and city size

Gravity redux: estimation of gravity-equation coefficients, elasticities of substitution, and general equilibrium comparative statics under asymmetric bilateral trade costs

Sergey Kichko

Journal of Economic Geography, 2020, vol. 20, issue 6, 1313-1329

Abstract: Larger cities typically give rise to two opposite effects: tougher competition among firms and higher production costs. Using an urban model with substitutability of production factors and pro-competitive effects, I study product market responses to an increase in city population, land-use regulations and commuting costs. I show that those responses depend on the land intensity in production. If the input share of land is low, a larger city attracts more firms setting lower prices, whereas for an intermediate land share, city expansion increases both the mass of firms and product prices. For a high land share, the mass of firms decreases with city size while product price increases. Softer land-use regulations and/or lower commuting costs reinforce pro-competitive effects, making city residents better-off via lower product prices and broader diversity.

Keywords: Land prices; pro-competitive effects; city size; land-use regulations; product diversity (search for similar items in EconPapers)
JEL-codes: R13 R32 R52 (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1093/jeg/lbz037 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Competition, Land Prices, and City Size (2019)
Working Paper: Competition, Land Price, and City Size (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:jecgeo:v:20:y:2020:i:6:p:1313-1329.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

Journal of Economic Geography is currently edited by Jorge De la Roca, Stephen Gibbons, Simona Iammarino, Amanda Ross and James Faulconbridge

More articles in Journal of Economic Geography from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().