Working Paper: NBER ID: w30875
Authors: Stephen J. Redding
Abstract: Economic activity is highly unevenly distributed within cities, as reflected in the concentration of economic functions in specific locations, such as finance in the Square Mile in London. The extent to which this concentration reflects natural advantages versus agglomeration forces is central to a range of public policy issues, including the impact of local taxation and transport infrastructure improvements. This paper reviews recent quantitative urban models, which incorporate both differences in natural advantages and agglomeration forces, and can be taken directly to observed data on cities. We show that these models can be used to estimate the strength of agglomeration forces and evaluate the impact of transportation infrastructure improvements on welfare and the spatial distribution of economic activity.
Keywords: No keywords provided
JEL Codes: R32; R41; R52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| natural advantages (first-nature geography) (R12) | concentration of economic activity (R11) |
| agglomeration forces (second-nature geography) (R12) | concentration of economic activity (R11) |
| agglomeration forces (R32) | externalities (D62) |
| externalities (D62) | inefficiencies in market equilibria (D52) |
| transportation infrastructure improvements (R42) | welfare (I38) |
| transportation infrastructure improvements (R42) | spatial distribution of economic activity (R12) |
| agglomeration forces (R32) | multiple equilibrium patterns of economic activity (D59) |
| small public policy changes (D78) | shift in location of economic activity (R11) |