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

19 09 2015

There is some great historical context in an important working new paper by Edward L. Glaeser, Giacomo AM Ponzetto, and Yimei Zou. “Urban Networks: Spreading the Flow of Goods, People, and Ideas.” (2015). The draws on historical research and discusses differences between the evolution of US and European cities in the course of coming up with policy advice for China.

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-o§ 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 conÖnes, 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 .

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