The Rise of the City

The Rise of the City

Spatial Dynamics in the Urban Century

New Horizons in Regional Science series

Edited by Karima Kourtit, Peter Nijkamp and Roger R. Stough

This book examines urban growth and the dynamics that are transforming the city and city regions in the 21st century focusing specifically on the spatial aspects of this process in the “Urban Century”. Forces that are driving city growth include agglomeration spillovers, concentration of innovation and entrepreneurship, diversity of information and knowledge resources, and better amenities and higher wages. These benefits produce a positive reinforcing system that attracts more people with new ideas and information, fuelling innovation, new products and services and more high-wage jobs, thereby attracting more people. Such growth also produces undesirable effects such as air and water pollution, poverty, congestion and crowding. These combined factors both impact and change the geography and spatial dynamics of the city. These transformations and the public policies that may be critical to the quality of life, both today and in the future, are the substance of this book.

Chapter 4: Agglomeration economies in large versus small cities: similar laws, high specifities

Roberto Camagni, Roberta Capello and Andrea Caragliu

Subjects: economics and finance, economics of innovation, urban economics, geography, cities, urban and regional studies, cities, urban economics

Extract

During the 1970s, the debate on agglomeration economies was strongly in favour of a natural law valid for all cities, leading to the existence of an “optimal” city size; based on a number of empirical studies, agglomeration advantages were said to exist up to a certain size, after which decreasing returns emerged, leading to one single “optimal” city size, achieved by all cities when marginal location costs equal marginal location benefits. However, many criticisms arose against the optimal city size theory, starting with the author who contributed most to the popularity of the optimal urban size concept, namely William Alonso (1971). These criticisms include the observations that cities perform different functions, are characterized by different specializations and consequently operate with different production functions (Henderson, 1974, 1996). In the words of Richardson: “we may expect the efficient range of city sizes to vary, possibly dramatically, according to the functions and the structure of the cities in question” (1972, p. 30). In the real world, one would never expect the optimal position for each and every firm to occur at the same level of output; so why should one expect the optimal point in different cities to be identified at the same population level? In this literature, the opposite view that each city operates on its own cost and production curves is assumed, defining a specific optimal size for each city.

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