Agglomeration, Integration, and Territorial Authority Scale in a System of Trading Cities. Centralisation versus Devolution

44 Pages Posted: 17 Jun 2004  

Massimo Del Gatto

CRENOS - Centre for North South Economic Research; 'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics

Date Written: May 2004

Abstract

This paper emphasises the importance of the political-institutional dimension in the understanding of the spatial distribution of economic activity. We introduce the notion of Territorial Authority Scale, which refers to the degree of devolution (towards subnational tiers of government) involved in the authority to decide on Spatial Policy, and propose a model of agglomeration in a system of cities in which both intra-city trade and inter-city trade are considered. Enriching both the literature on integration/agglomeration and that on city size and formation, we show that: i) devolution results in over-agglomeration (fewer cities, which tend to be over-sized) and low welfare; ii) the higher the level of spatial (i.e. transport costs) and economic (i.e. intensity of trade) integration, the higher is the magnitude of the inefficiency. From a theoretical point of view, the paper represents an attempt to import, into geographical economics, a scale approach, which is an established approach to the notion of space in sociology.

Keywords: Agglomeration, integration, cities, devolution, economic geography, transport costs, spatial policy, trade, product variety, linkages

JEL Classification: F12, F15, L11, L13, R12, R13, R59

Suggested Citation

Del Gatto, Massimo, Agglomeration, Integration, and Territorial Authority Scale in a System of Trading Cities. Centralisation versus Devolution (May 2004). FEEM Working Paper No. 93.04. Available at SSRN: https://ssrn.com/abstract=534705

Massimo Del Gatto (Contact Author)

CRENOS - Centre for North South Economic Research ( email )

Cagliari
Italy

'Gabriele d'Annunzio' University of Chieti-Pescara - Faculty of Economics ( email )

Faculty of Economics - Department of Economics
Viale Pindaro, 42
Pescara, 65127
Italy

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