Production Externalities and Urban Configuration

1 We are very grateful to Masa Fujita for his insightful comments. We have also benefitted from suggestions made by an associate editor, James Foster, Rob Reed, and participants of the Midwest Mathematical Economics Conference at the University of Michigan and of the Regional Science Association International Meetings at Santa Fe. The first and the second authors acknowledge financial support from NSF Grant SBR-9523940 and from NSC Grant 35149F, respectively. Part of the paper was completed while the second author was visiting the Economics Department of Washington University (l997–1998). We also acknowledge financial support from the Institute of Economics of the Academia Sinica, which facilitated international collaboration between the authors. Needless to say, the usual disclaimer applies. Marcus Berliant