Optimal Spatial Structure And Regional Development

Given the number and the sizes of business enterprises and their location on a homogeneous plain, the optimal city size from the perspective of the individual firm will be determined by demand and supply conditions. These conditions are in a static framework reduced to agglomeration economies and the cost of infrastructure and administrative urban services. As both vary with city sizes, each firm has to compare the relevant supply and demand prices at different levels and will find its optimal city size at the tangency point of the cost function of urban services with its isoprofit curve. As a next step, one has to find out how many firms have their optimum at each particular city size group. The assumption of a given number of competing firms has then to be relaxed. When the number of the firms settling in a city size group has been determined, it must be translated into population figures, so that it can be seen how many cities would be necessary to lodge all the firms for which the particular size group is optimal. In a second section, the optimal distribution in space is discussed for the cities whose optimal size has been determined. Among the various interactions between cities, the author concentrates on two factors which strengthen the viability and the growth potential of a city: common agglomeration economies enjoyed in the vicinity of a bigger center, and the existence of an economically strong hinterland. The combined effect of these two factors will result in a ‘pessimum distance’ from one center to another. In the last section the author discusses intra‐city and inter‐firm relationships. He shows the necessity of further research laying particular emphasis on the problems of intra‐regional labor mobility, the degree of dispersion of economic activities in a metropolitan area and the costs of changing already existing structures.