Chapter4Citysize城市规模.pptx

Review,Why cities exist? Why do firms cluster? Localization economics Sharing intermediate inputs Sharing a labor pool Labor matching Knowledge spillover Urbanization economics Sharing, Pooling, Matching, Learning,CHAPTER 4,City Size how determined and distributed,I. Utility and City Size,How does an increase in city size affect the utility of the typical worker? Benefits and Costs of city Centrifugal force(agglomeration force) Agglomeration economics increase labor productivity Higher wage Centripetal force(congestion force) Population growth incurs longer commuting time Higher commuting cost,So far, we ignore the location decisions of workers within a particular city Locational equilibrium and land rent Price and just to achieve the locational equilibrium Difference in commuting generate different land rent Compare two workers: One lives near the production center Another lives 5 miles from the center,Who gets rent from land?,In theoretical model, we always assume a un-observed land owner Here suppose that workers own land To keep things simply, shared equally Each worker earns an average rent income $15 Utility=Labor income commute cost+ rent income -rent paid Labor market equilibrium Land market equilibrium,II. A System of Cities,Utility curve to explore how worker forces are distributed Consider a region with a total urban worker force of 6 million three possible configurations Sixes citiesA,B,C,D,E,F,each with a workforce of 1 million Three citiesD,E,F, each with a workforce of 2 million Two citiesE,F, each with a workforce of 3 million,Utility curve for different city size,Cities are not too small,As shown in point S, Is it a stable equilibrium? Will workers have an incentive to move from one city to another? Suppose a group of workers moves city A to city D Workforce in city D will increase Causing move upward along the utility curve $60 Workforce in city A will shrink A lower utility level in city A $58 A utility gap $2 unstable,Self-reinforcing effects generate extreme outcomes Migration is self-reinforcing in the positively sloped near point S The more workers who migrate The larger the utility gap between two cities The greater the incentive to relocate Extreme case, every one relocate from city A to city D,The same logic applies to other cities Suppose cities A,B,C shrink and eventually disappear While D,E and F grow, each eventually doubling in size Reach point M in the above figure, housing workforce of 2 million and utility level of $70 dollars Happen to be optimum,Cities maybe too Large,What happens if we start out with a small number of large cities? Suppose we start two large cities Point L, each with a workforce of 3 million Utility is lower than the maximum level Is two-city outcome a stable equilibrium?,Consider the effects of migration from city E to city F Workforce in city F will grow Reach a lower level utility $67 Workforce in city E will shrink Reach a higher level utility $69 Migration opens a utility gap $2, but utility is higher in the smaller city, not the large one,Self-correcting not Self-reinforcing Migration will be reversed People who move from E to F, regret People who originally live in F, swapped Why the situation with small cities unstable, while the situation with large cities is stable? Agglomeration economies are stronger /weaker than diseconomies of scale resulting from commuting Self reinforcing eliminates small cities Inefficiently large cities persist,Excercise,How about a region with a huge city and a smaller city? Suppose we have cities A,B? A has a workforce of 3 million B has a workforce of 1 million,III. Specialized and Diverse Cities,Do cities specialize in a narrow set of economic activities? Or do they generalize, producing a diverse mix of products? Henderson(1988): co-exist? Specialized and diverse cities are actually complementary Serving different role in a market economy Many firms starting their life in a diverse city and eventually relocated in a specialized city,Nursery cities (Duranton and Puga, 2001),Basic idea: diverse cities foster new ideas and serve as a Nursery Once a firm settles on a product design, production will me more efficiently in a specialized city that fully exploits localization economies In short: diverse cities foster innovation, while specialized city facilitate efficient production,Considering a firm is looking for the ideal production process for a new product Need to experiment with different processes Eventually find an ideal one and switch to mass production Where should the firm experiment? In a diverse city or specialized city?,Consider an alternative scenario: a specialized city Trade-offs: Good news: lower prototype cost The city is specialized in the production process Bad news: higher moving cost Search for ideal process require the firm moving from one city to another Moving costs are large relative in saving in prototype cost,Example: The radio industry in New York,Vernon(1972) indentify the radio industry in New York as classical example of an industry developed in a diversified city. In the 1920s, Technology was unsettled Production methods were untried Market was uncertain Mortality was high An urban area like New York is attractive,Vernon(1972) explains why radio industry eventually left New York metropolitan area: The technology had been settle down Production methods were standardized The critical question is reducing transport and labor cost Small firms faded from the picture and large assembly plants appeared at lower-range locations,Evidence of Nursery cities,Duranton and Puga(2001): using data from France, among of those firms relocated, 7 in10 relocated from diverse to specialized The most innovative industries have the highest frequency of relocated. How about more direct evidence? China?,Firm life cycle, Innovation and Agglomeration economics,By Xiaofang DONG(2012) The younger the firm, the more benefit they get from diverse city The older the firm, the more benefit they get from specialized city,IV. Differences in City Size,Table 4-1 shows the wide rang of city size in the United States Other country have similar pattern We will talk The roles of localization and urbanization economies in determining city size The role of local goods The role of export goods,Difference in Localization and Urbanization economies,Suppose we have three types of cities in a regional economy. Small localization Localization economies are exhausted with a relatively small workforce Diseconomies of commuting quickly overwhelm Large localization Large urbanization,Localization equilibrium requires that workers in the region are indifferent between the three cities The same utility level Suppose 10 million workers Points s,m, and b show one possible equilibrium An stable equilibrium because each city is on the negatively sloped portion of its utility curve,Local goods and City size,So far, ignore the consumer side of the urban economy Some local products are available in all cities A barber A pizzeria Some local products are available only in large cities An opera An brain surgery Larger cities have a wider variety of consumer products, including everything available in small ciites,Local employment Amplifies Size Difference,Distinguish between employment in industries that export their output to people outside the city Sell theirs products locally to residents of the city Suppose that in a city with export employment of 1 million, each export job support half a job in local industry with export employment of 3 million, each export job support one job in local industry with export employment of 6 million, each export job support two job in local industry,V. The Size Distribution of Cities,The Rank-size rule,Geographers and economists has a conclusion of city rank and city size: Rank times population is constant across cities In other words, if the largest city has population of 24 million, the second largest should be 12 million, and so on Nitsche(2005) analyzes the results of 29 studies of the rank size relationship: Rank=C/Nb, and find b between 0.80 to 1.20, median as 1.09, and the rank-rules hold,Rank-size of Chinese cities,Rank-size of Chinese cities,Definition of cities matter Political definition A political city is defined by boundaries that separate political jurisdictions Or economic definition A economy city ignores political boundaries and includes in a city population all the people who are involved in a particular urban economy Always includes a central along with all the surrounding communities The median of b is 1.02, more closer to the rank size role,Urban Giants: The puzzle of Large Primary cities,Why?,Economists have developed several models to explain the large concentration of population in primary cities: Large economie