Intercity Trade and Convergent versus Divergent Urban Growth
نویسنده
چکیده
The paper studies intercity trade and growth in an overlapping-generations economy where tradeable goods are produced using a composite of capital, raw labor and intermediates, and are combined in each city to produce a composite. The composite is used for consumption and investment. Tax-financed investment that affects commuting costs endogenizes city size. A combination of weak (strong) diminishing returns and strong (weak) market size effects can lead to increasing (decreasing) returns to scale. Autarkic urban growth may be parallel or divergent. Capital growth in the integrated economy has the same dynamic properties as its counterpart for an economy with autarkic cities but leads to national constant returns to scale. * This is an outgrowth of material from “Urban Structure, Intercity Trade, and Economic Growth,” which was presented at C.R.E.T.E. 2007, Naxos, July 2007 and the University of Cyprus, March 2008. I thank Marcus Berliant, Drusilla Brown, Theodore Palivos and Marios Zachariades for very insightful comments. The usual caveats apply. TradeConvDivGrowth 06 19 08.tex
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