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How polycentric is a monocentric city?: centers, spillovers and hysteresis

Gabriel Ahlfeldt and Nicolai Wendland ()

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

Abstract: We assess the extent to which firms in an environment of decreasing transport costs and industrial transformation value the benefits of proximity to a historic CBD and agglomeration economies in their location decisions. Taking a hybrid perspective of classical bid-rent theory and a world where clustering of economic activity is driven by between-firm spillovers, Berlin, Germany, from 1890 to 1936 serves as a case in point. Our results suggest that the average productivity effect of a doubling of between- firm spillovers over the study period increases from 3.5% to 8.3%. As the city transforms into a service-based economy, several micro agglomerations emerge. Their locations close to the CBD still make the city look roughly monocentric. This is in line with a hysteresis effect in which second-nature geography drives the ongoing strength of a historic city center even though the importance of the originally relevant first-nature geography has vanished.

Keywords: transport innovations; land values; location productivity; agglomeration economies; economic history; Berlin (search for similar items in EconPapers)
JEL-codes: N7 N9 O12 R33 (search for similar items in EconPapers)
Date: 2013-01
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Published in Journal of Economic Geography, January, 2013, 13(1), pp. 53-83. ISSN: 1468-2702

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