A threshold model of urban development

Abstract We propose a simple model of distribution economic activity across cities endogenous size and number determined by individual incentives. The individuals populating our are endowed with idiosyncratic entrepreneurial creativity, the realization which requires urban agglomeration linked to crowding cost. Focusing on dynamics development, predictions include U-shaped relation between well-known measures urbanization primacy, hypothesis that we test empirically using World Bank data. Our findings complement growing consensus relations level concentration broad set applications.