Publication Type

Journal Article

Version

acceptedVersion

Publication Date

9-2012

Abstract

This paper proposes a theory of city size distribution via a hierarchy approach rather than the popular random growth process. It does so by formalizing central place theory using an equilibrium entry model and specifying the conditions under which city size distribution follows a power law. Central place theory describes the way in which a hierarchical city system with different layers of cities serving differently sized market areas is formed from a uniformly populated space. The force driving the city size differences in this model is the heterogeneity in economies of scale across goods. The city size distribution under a central place hierarchy exhibits a power law if the distribution of scale economies is regularly varying, which is a general class that encompasses many well-known, commonly used distributions. This model is also consistent with a power law for firms and a number-average-size rule, which is the log-linear relationship between the number and average size of the cities in which an industry is located.

Keywords

Central place theory, power law, Zipf’s law, regular variation, number-averagesize rule, fractal structure

Discipline

Behavioral Economics | Growth and Development | Urban Studies and Planning

Research Areas

Applied Microeconomics

Publication

Economic Journal

Volume

122

Issue

563

First Page

903

Last Page

932

ISSN

0013-0133

Identifier

10.1111/j.1468-0297.2012.02518.x

Publisher

Wiley

Copyright Owner and License

Authors

Comments

See concise video made by the Royal Economic Society where the author explains the paper.

Additional URL

https://doi.org/10.1111/j.1468-0297.2012.02518.x

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