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The cost of agglomeration: Land prices in cities

Pierre-Philippe Combes (), Gilles Duranton () and Laurent Gobillon ()

Sciences Po publications from Sciences Po

Abstract: We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French house and land price data. After handling a number of estimation concerns, we find that the elasticity of urban costs increases with city population with an estimate of about 0.03 for an urban area with 100,000 inhabitants to 0.08 for an urban area of the size of Paris. Our approach also yields a number of intermediate outputs of independent interest such as the share of housing in expenditure, the elasticity of unit house and land prices with respect to city population, and within-city distance gradients for house and land prices.

Keywords: Urban costs; House prices; Land prices; Land use; Agglomeration (search for similar items in EconPapers)
JEL-codes: R31 R21 R14 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-ure
Date: 2018-10
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Published in The review of economic studies, 2018, vol. forthcoming

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Related works:
Working Paper: The Cost of Agglomeration: Land Prices in Cities (2012) Downloads
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