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.
Central place theory, power law, Zipf’s law, regular variation, number-averagesize rule, fractal structure
Economic Theory | Growth and Development
Wiley: 24 months
Central place theory and city size distribution. (2011). Economic Journal. 122, (563), 903-932. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/1994
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