PRODUCT VARIETY, MARSHALLIAN EXTERNALITIES, AND CITY SIZES

A monopolistic competition approach to the study of city sizes is proposed and compared with the traditional approach, based on external economies. A monocentric city is considered in which the central business district is surrounded by residential land for households. The central idea behind the mo...

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Bibliographic Details
Published in:Journal of regional science 1990-05, Vol.30 (2), p.165-183
Main Authors: Abdel-Rahman, Hesham, Fujita, Masahisa
Format: Article
Language:English
Subjects:
Bgi / Prodig
Central business districts
Cities
Competition
Economic models
Economic theory
Human geography
Labor
Monopolies
Monopolistic competition
Production functions
Size
Supply & demand
Urban areas
Urban development
Urban economics. Equipment. Transportation
Urban geography
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Summary:A monopolistic competition approach to the study of city sizes is proposed and compared with the traditional approach, based on external economies. A monocentric city is considered in which the central business district is surrounded by residential land for households. The central idea behind the model is that increasing returns to scale in the service industry and the desire of the traded-good industry to employ a variety of intermediate services may provide the basic sources of industrial agglomeration in the city. It is shown that the urban aggregates derived from the 2 approaches have the same structural relationships. Thus, from the viewpoint of descriptive analyses of urban aggregates, the monopolistic competition model can be considered as a specific example of the external economy model. However, from the viewpoint of normative analysis, the 2 approaches lead to substantially different results. Thus, in empirical implementations of these approaches, it is essential to identify which model more closely represents the actual city economy.
ISSN:0022-4146
1467-9787
DOI:10.1111/j.1467-9787.1990.tb00091.x