Welfare costs of the suboptimal size distribution of cities

Article Abstract:

The positive relationship between city productivity and city size is analyzed in order to calculate the welfare costs of the suboptimal size distribution of cities. When this size distribution is optimal, a nation's output is at maximum. At suboptimal levels, welfare costs are incurred that may be measured using a heirarchial specification. Such a model, which considers city productivity, is used on US and Korean data, yielding welfare cost estimates of 2.5% and 4.1% of gross national product, respectively. The method also yields an upper bound on prime city size, which is calculated at 2.8% for the US and 9.4% for Korea. The results indicate that simultaneous consideration of city size and economic factors is necessary in constructing an optimality index, and with it, estimating the costs of suboptimality.

Metropolitan areas, Welfare economics

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The optimal size distribution of cities

Article Abstract:

Characteristics of the optimal size distribution of cities were studied using the hierarchical model. The productivity of cities was analyzed. An optimality index was developed, and values were estimated for the US and Korea. The size distribution of cities can be better understood not only by studying the size of cities, but also by investigating such economic factors as productivity and gross regional product.

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Intercity trade and the industrial diversification of cities

Article Abstract:

The industrial diversification of cities without imposing linkages among industries is explained. In each of two city-industries, a manufacture is produced competitively as the final good using labor and industry-specific differentiated services.

Analysis, Diversification in industry, Industrial diversification

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