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CitySize

WhyDoCitiesVaryinSizeandScope?4-2UtilityandCitySizeLocalizationandurbanizationeconomiesincreaseproductivity&wageCommutetimeincreaseswithcitysize,decreasingleisuretime4-34-4LocationalEquilibriumWithinaCityC:DifferencesincommutecostoffsetbydifferencesinlandrentE:Equalsharesoflandrent,averaging$15Utility=Laborincome+rentalincome-commutecost-rentpaid4-5SystemofCitiesinaRegionDividefixednumberofworkersamongcitiesinregionSixcities,eachwith1millionworkersThreecities,eachwith2millionworkersTwocities,eachwith3millionworkers4-6Figure4-2CitiesMayBeTooLargeAlongthenegativelyslopedportionoftheutilitycurve,changesinpopulationareself-correcting4-7Figure4-2CitiesAreNotTooSmallAlongthepositivelyslopedportionoftheutilitycurve,changesinpopulationareself-reinforcing4-84-9SpecializedandDiverseCitiesTwotypesofcitiesarecomplementaryManyfirmsstartindiversecity,whichfosternewideasMaturingfirmsrelocatetospecializedcitiestoexploitlocalizationeconomies4-10AModelofLaboratoryCitiesFirmgropesforidealproductionprocessfornewproductbybuildingprototypes,imitatingotherfirmsintheprocessOnceidealprocessfound,firmproduceslargequantityinaspecializedcityLocationforexperimentation:Diversecityorseriesofspecializedcities?Diversecity:Relativelyhighprototypecost,givenlackoflocalizationeconomiesSpecializedcities:MovefromonecitytoanotheruntilidealprocessfoundDiversecityismoreprofitableifmovingcostsarerelativelylarge4-11Example:TheRadioIndustryinNewYorkEarlyfirmswere“small,numerous,agile,nervous,andheavilyreliantonsubcontractors”NYCprovidedawidevarietyofintermediateinputsandworkersOncetechnologysettled,firmsrelocatedtoeconomizeonlaborcost4-12EvidenceofLaboratoryCitiesFrenchfirms:7of10relocationsfromdiversetospecializedcityMostinnovativefirmshavehighestfrequencyofmovesfromdiversetospecialized4-13DifferencesinCitySize:IntroductionWhydocitiesdifferinsizeandscope?Preview:Differencesinlocalization&urbanizationeconomiesIntroductionoflocalgoodsamplifiesdifferencesinsize4-144-154-164-174-18LocalGoodsandCitySizeSomelocalgoods(haircuts,groceries,pizza)soldinallcities,large&smallPer-capitademandlargerelativetoscaleeconomiesinproductionLocalemploymentroughlyproportionaltopopulationSomelocalproducts(brainsurgery,opera)soldonlyinlargecitiesPer-capitademandsmallrelativetoscaleeconomiesinproductionLocalemploymentconcentratedinlargercitiesLargercitieshavewidervariety:pizzas,haircuts,opera,brainsurgery4-194-204-21TheRank-SizeRuleRank=C/NbRank-sizeruleholdsifb=1:Rank?N=CEmpiricalresultsMedianestimateb=1.09:Closetorank-sizerule,butmoreevendistributionDefinitionofeconomiccity:b=1.024-22ThePuzzleoftheLargePrimaryCity4-23ReasonsforLargePrimaryCitiesTradingandindivisibilitiesinimport/exp

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