Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Urban Economics I A15-V1
We study the optimal and equilibrium size of cities in a monocentric city model with environmental pollution. Pollution is related to city size through the effect of population on production, commuting, and housing consumption. If pollution is local, we find that equilibrium cities are too large, mirroring standard results in the theory of city systems. When pollution is global and per capita pollution declines with city size, however, equilibrium cities may be too small.