The Optimal Distribution of Population Across Cities

50 Pages Posted: 14 Nov 2016 Last revised: 13 May 2021

See all articles by David Albouy

David Albouy

University of Illinois at Urbana-Champaign

Kristian Behrens

University of Quebec at Montreal (UQAM) - Department of Economics

Frederic Robert-Nicoud

University of Geneva - Department of Political Economics; Centre for Economic Policy Research (CEPR)

Nathan Seegert

University of Utah - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: November 2016

Abstract

The received economic wisdom is that cities are too big and that public policy should limit their sizes. This wisdom assumes, unrealistically, that city sites are homogeneous, migration is unfettered, land is given freely to incoming migrants, and federal taxes are neutral. Should those assumptions not hold, large cities may be inefficiently small. We prove this claim in a system of cities with heterogeneous sites and either free mobility or local governments, where agglomeration economies, congestion, federal taxation, and land ownership create wedges. A quantitative version of our model suggests that cities may well be too numerous and underpopulated for a wide range of plausible parameter values. The welfare costs of free migration equilibria appear small, whereas they seem substantial when local governments control city size.

Suggested Citation

Albouy, David and Behrens, Kristian and Robert-Nicoud, Frederic L. and Seegert, Nathan, The Optimal Distribution of Population Across Cities (November 2016). NBER Working Paper No. w22823, Available at SSRN: https://ssrn.com/abstract=2868922

David Albouy (Contact Author)

University of Illinois at Urbana-Champaign ( email )

Kristian Behrens

University of Quebec at Montreal (UQAM) - Department of Economics ( email )

P.O. Box 8888, Downtown Station
Montreal, Quebec H3C 3P8
Canada

Frederic L. Robert-Nicoud

University of Geneva - Department of Political Economics ( email )

40, boulevard du Pont-d'Arve
Geneva 4, CH-1211
Switzerland
+41 22 379 8272 (Phone)
+41 22 379 8293 (Fax)

HOME PAGE: http://www.unige.ch/ses/ecopo/staff/robert/home.html

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Nathan Seegert

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States

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