Re-study on Chinese city size and policy formation

The past four decades, especially the first decade of the 21st century, have witnessed dramatic development in terms of industrialization and urbanization in China. In the process, both, urban agglomeration economies and diseconomies played important roles, although the latter has long been neglected by researchers. Taking economic productivity, environmental quality, and commuting costs into account, this paper re-studies the optimum size of Chinese cities. Based on three reasonable assumptions, we prove the existence and uniqueness of the optimum size in a particular city, which is affected directly by commuting costs, preference degree for environmental quality, as well as industrial structure. Using China's population census and urban yearbook data in 2000 and 2010, we find that city size imbalances in China are obvious. First-tier cities are oversized, while other cities are undersized, and this imbalance becomes more significant while considering urban environmental quality.