Optimum City Size: The External Diseconomy Question

J. Vernon Henderson

No 91, Working Paper from Economics Department, Queen's University

Abstract: This paper discusses whether market-achieved city size is greater or less than optimum city size. The divergence between optimum and achieved city size is due to external diseconomies such as pollution. Imposing an optimal tax on pollution may not, as is commonly thought, cause even an initial reduction in output of the polluting good. Moreover, the paper shows, even if output initially falls with optimal taxation, the corresponding reduction in pollution and shift toward consumption of non-polluting goods will make city inhabitants better off. The increased welfare of city inhabitants will result in immigration to the city.

Pages: 31 pages
Date: 1972-08
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Citations: View citations in EconPapers (1)

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http://qed.econ.queensu.ca/working_papers/papers/qed_wp_91.pdf First version 1972 (application/pdf)

Related works:
Journal Article: Optimum City Size: The External Diseconomy Question (1974)
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