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Spatial Costs in a Monocentric City(And Implications for Agglomeration)

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  • Hugh B. Wenban-Smith

Abstract

Using water supply as a model for a wider range of infrastructure services, the effect of a negative exponential density gradient on distribution costs is investigated for four monocentric urban development scenarios: (a) Densification; (b) Dispersion; (c) Suburbanisation; and (d) Constant density. It is shown that economies of scale in production can be outweighed by diseconomies in distribution in cases (b) and (c), suggesting that the agglomeration benefits of infrastructure cannot be taken for granted. They depend as much on the effect of density on distribution costs as the effect of size on production costs.

Suggested Citation

  • Hugh B. Wenban-Smith, 2009. "Spatial Costs in a Monocentric City(And Implications for Agglomeration)," SERC Discussion Papers 0032, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:sercdp:0032
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    File URL: http://cep.lse.ac.uk/pubs/download/sercdp0032.pdf
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    More about this item

    Keywords

    Urbanisation; spatial analysis; returns to scale; water utilities;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L95 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Gas Utilities; Pipelines; Water Utilities

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