The Optimum Factory Town

Avinash Dixit

Bell Journal of Economics, 1973, vol. 4, issue 2, 637-654

Abstract: This paper studies the determination of the optimum size and arrangement of a monocentric city,. The major consideration is the trade-off between economies of scale in production in the central business district and the diseconomies of congestion in commuter transport. Planned optimum allocations and their decentralized implementation by suitable taxes and transfers are discussed. Rent and density profiles and land use are solved in closed form, and complete numerical solutions are obtained for particular parameter values. It is shown that negative exponential rent and density profiles may not be very good approximations, and that cities of more than a million inhabitants are difficult to justify in the framework considered.

Date: 1973
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