Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/201953 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
CESifo Working Paper No. 7727
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Larger cities typically give rise to two opposite effects: tougher competition among firms and higher production costs. Using an urban model with substitutability of production factors and pro-competitive effects, I study the response of the market outcome to city size, land-use regulations, and commuting costs. For industries with low input shares of land, larger cities host more firms setting lower prices whereas for sectors with intermediate land shares larger cities accommodate more firms charging higher prices. Softer land-use regulations and/or lower commuting costs reinforce pro-competitive effects, making larger cities more attractive for residents via lower prices and broader product diversity.
Subjects: 
land prices
pro-competitive effects
city size
product diversity
land-use regulations
JEL: 
L11
L13
R13
R32
R52
Document Type: 
Working Paper
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