The optimal distribution of population across cities

Frederic Robert-Nicoud, David Albouy, Kristian Behrens and Nathan Seegert

No 11616, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: The received economic wisdom is that cities are too big and that public policy should limit their sizes. This wisdom assumes, unrealistically, that city sites are homogeneous, migration is unfettered, land is given freely to incoming migrants, and federal taxes are neutral. Should those assumptions not hold, large cities may be inefficiently small. We prove this claim in a system of cities with heterogeneous sites and either free mobility or local governments, where agglomeration economies, congestion, federal taxation, and land ownership create wedges. A quantitative version of our model suggests that cities may well be too numerous and underpopulated for a wide range of plausible parameter values. The welfare costs of free migration equilibria appear small, whereas they seem substantialwhen local governments control city size.

Keywords: City size; Heterogeneous sites; Local governments; Federal taxation (search for similar items in EconPapers)
JEL-codes: H73 J61 R12 (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-geo
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Citations: View citations in EconPapers (15)

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Related works:
Journal Article: The optimal distribution of population across cities (2019)
Working Paper: The Optimal Distribution of Population across Cities (2016)
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