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.