Urban Networks: Spreading the Flow of Goods, People, and Ideas

55 Pages Posted: 16 Sep 2015

See all articles by Edward L. Glaeser

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra

Yimei Zou

Universitat Pompeu Fabra

Date Written: September 2015

Abstract

Should China build mega-cities or a network of linked middle-sized metropolises? Can Europe's mid-sized cities compete with global agglomeration by forging stronger inter-urban links? This paper examines these questions within a model of recombinant growth and endogenous local amenities. Three primary factors determine the trade-off between networks and big cities: local returns to scale in innovation, the elasticity of housing supply, and the importance of local amenities. Even if there are global increasing returns, the returns to local scale in innovation may be decreasing, and that makes networks more appealing than mega-cities. Inelastic housing supply makes it harder to supply more space in dense confines, which perhaps explains why networks are more popular in regulated Europe than in the American Sunbelt. Larger cities can dominate networks because of amenities, as long as the benefits of scale overwhelm the downsides of density. In our framework, the skilled are more likely to prefer mega-cities than the less skilled, and the long-run benefits of either mega-cities or networks may be quite different from the short-run benefits.

Keywords: cities, growth, migration, networks

JEL Classification: F15, O18, R10, R58

Suggested Citation

Glaeser, Edward L. and Ponzetto, Giacomo A. M. and Zou, Yimei, Urban Networks: Spreading the Flow of Goods, People, and Ideas (September 2015). CEPR Discussion Paper No. DP10816. Available at SSRN: https://ssrn.com/abstract=2661545

Edward L. Glaeser (Contact Author)

Harvard University - Department of Economics ( email )

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Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra ( email )

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+34 93 542 2826 (Fax)

HOME PAGE: http://www.crei.cat/people/ponzetto

Yimei Zou

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, E-08005
Spain

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