Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/124823
Authors: 
Biller, Dan
Andres, Luis
Cuberes, David
Year of Publication: 
2015
Series/Report no.: 
55th Congress of the European Regional Science Association: "World Renaissance: Changing roles for people and places", 25-28 August 2015, Lisbon, Portugal
Abstract: 
In this paper we develop a dynamic model that explains the pattern of population and production allocation in an economy with an urban location and a rural one. Agglomeration economies make urban dwellers benefit from a larger population living in the city and urban firms become more productive when they operate in locations with a larger labor force. However, congestion costs associated with a too large population size limit the process of urban-rural transformation. Firms in the urban location also benefit from a public good that enhances their productivity. The model predicts that in the competitive equilibrium the urban location is inefficiently small because households fail to internalize the agglomeration economies and the positive effect of public goods in urban production.
Subjects: 
rural-urban transformation
agglomeration economies
congestion costs
public
JEL: 
H40
R1
R23
Document Type: 
Conference Paper

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