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A threshold model of urban development

Author

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  • Alberto Vesperoni

    (King’s College London)

  • Paul Schweinzer

    (Alpen-Adria-Universität Klagenfurt)

Abstract

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

Suggested Citation

  • Alberto Vesperoni & Paul Schweinzer, 2023. "A threshold model of urban development," International Journal of Game Theory, Springer;Game Theory Society, vol. 52(3), pages 891-924, September.
    • Handle: RePEc:spr:jogath:v:52:y:2023:i:3:d:10.1007_s00182-023-00844-5
    DOI: 10.1007/s00182-023-00844-5
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    More about this item

    Keywords

    Agglomeration; Urbanization; Development;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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