List of papers for participants presentations
(with abstracts)

1. Anas A., Kim I. (1996) General equilibrium models of polycentric urban land use with endogenous congestion and job agglomeration, Journal of Urban Economics, 40(2): 217–32. doi pdf

A computable general equilibrium model of urban land use is developed with land allocated to houses, production, and roads. Traffic congestion and employment location are endogenous. Consumers choose job and home locations and want to shop everywhere. Without scale economies in shopping, production is dispersed with rent, wage, commodity price, and net density gradients all peaking at the center of the space. When scale economies in shopping are strong relative to the cost of traffic congestion, dispersion becomes unstable. Multiple equilibria emerge as production agglomerates into a number of centers. Our algorithm tests the stability of equilibria and finds perturbations that set off transitions to other equilibria. The number of centers trades off the benefits from agglomeration against those from access. With stronger agglomeration, there are fewer and bigger centers and utility is higher with fewer centers. With higher congestion, the number of centers increases and utility is higher with more centers.

2. Au C. C., Henderson V. (2006) Are Chinese cities too small? Review of Economic Studies, 73(3): 549–76. doi pdf

This paper models and estimates net urban agglomeration economies for cities. Economic models of cities postulate an inverted U shape of real income per worker against city employment, where the inverted U shifts with industrial composition across the urban hierarchy of cities. This relationship has never been estimated, in part because of data requirements. China has the necessary data and context. We find that urban agglomeration benefits are high – real incomes per worker rise sharply with increases in city size from a low level. They level out nearer the peak and then decline very slowly past the peak. We find that a large fraction of cities in China are undersized due to nationally imposed, strong migration restrictions, resulting in large income losses.

3. Brueckner J. K., Thisse J.-F., Zenou Y. (1999) Why is central Paris rich and downtown Detroit poor?: An amenity-based theory, European Economic Review, 43(1): 91–107. doi pdf

This paper presents an amenity-based theory of location by income. The theory shows that the relative location of different income groups depends on the spatial pattern of amenities in a city. When the center has a strong amenity advantage over the suburbs, the rich are likely to live at central locations. When the center's amenity advantage is weak or negative, the rich are likely to live in the suburbs. The virtue of the theory is that it ties location by income to a city's idiosyncratic characteristics. It thus predicts a multiplicity of location patterns across cities, consistent with real-world observation.

4. Cavailhès J., Gaigné C., Tabuchi T., Thisse J.-F. (2007) Trade and the structure of cities, Journal of Urban Economics, 62(3): 383–404. doi pdf

Our purpose is to investigate how the interplay between trade, commuting and communication costs shapes the economy at both the interregional and intra-urban levels. Specifically, we study how economic integration affects the internal structure of cities and show how decentralizing the production and consumption of goods in secondary employment centers allows firms located in a large city to maintain their predominance. Several new results in both economic geography and urban economics are established, which all agree with empirical evidence.

5. Charlot S., Duranton G. (2004) Communication externalities in cities, Journal of Urban Economics, 56(3): 581–613. doi pdf

To identify communication externalities in French cities, we exploit a unique survey recording workplace communication of individual workers. Our hypothesis is that in larger and/or more educated cities, workers should communicate more. In turn, more communication should have a positive effect on wages. By estimating both an earnings and a communication equation, we find evidence of communication externalities. In larger and more educated cities, workers communicate more and in turn this has a positive effects on their wages. Depending on the estimates, we find that 13 to 22% of the effects of a more educated and larger city on wages percolate through this channel.

6. Duranton G. (2007) Urban evolutions: The fast, the slow, and the still, The American Economic Review, 97(1): 197–221. doi pdf

Using French and US data, new and systematic evidence is provided about the rapid location changes of industries across cities (the fast). Cities are also slowly moving up and down the urban hierarchy (the slow) while the size distribution of cities is skewed to the right and very stable (the still). The model proposed here reproduces these three features. Small innovation-driven shocks lead to the churning of industries across cities. Then, cities slowly grow or decline following net gains or losses of industries. These changes occur within a stable distribution. The quantitative implications of the model are also explored.

7. Duranton G., Puga D. (2000) Diversity and specialisation in cities: Why, where and when does it matter? Urban Studies, 37(3): 533–55. doi pdf

Why are some cities specialised and others diversified? What are the advantages and disadvantages of urban specialisation and diversity? To what extent does the structure of cities, and the activities of firms and people in them, change over time? How does the sectoral composition of cities influence their evolution? To answer these and related questions, we first distil some key stylised facts from the empirical literature on cities and the composition of their activities. We then turn to a review of different theories looking at such issues, and study the extent to which these theories contribute to the understanding of the empirical regularities.

8. Duranton G., Puga D. (2001) Nursery cities: Urban diversity, process innovation, and the life cycle of products, American Economic Review, 91(5): 1454–77. doi pdf

This paper develops microfoundations for the role that diversified cities play in fostering innovation. A simple model of process innovation is proposed, where firms learn about their ideal production process by making prototypes. We build around this a dynamic general equilibrium model, and derive conditions under which diversified and specialised cities coexist. New products are developed in diversified cities, trying processes borrowed from different activities. On finding their ideal process, firms switch to mass-production and relocate to specialised cities with lower costs. When in equilibrium, this configuration welfare-dominates those with only diversified or only specialised cities. We find strong evidence of this relocation pattern in establishment relocations across French employment areas 1993-1996.

9. Eeckhout J. (2004) Gibrat's law for (all) cities. American Economic Review, 94(5): 1429–51. doi pdf

Two empirical regularities concerning the size distribution of cities have repeatedly been established: Zipf's law holds (the upper tail is Pareto), and city growth is proportionate. Census 2000 data are used covering the entire size distribution, not just the upper tail. The nontruncated distribution is shown to be lognormal, rather than Pareto. This provides a simple justification for the coexistence of proportionate growth and the resulting lognormal distribution. An equilibrium theory of local externalities that can explain the empirical size distribution of cities is proposed. The driving force is a random productivity process of local economies and the perfect mobility of workers.

10a. Ellison G., Glaeser E. L. (1999) The geographic concentration of industry: Does natural advantage explain agglomeration? American Economic Review, 89(2): 311–16. JStor doi pdf

10b. Ellison G., Glaeser E. L., Kerr W. R. (2010) What causes industry agglomeration? Evidence from coagglomeration patterns, American Economic Review, 100(3): 1195–1213. doi pdf

Why do firms cluster near one another? We test Marshall's theories of industrial agglomeration by examining which industries locate near one another, or coagglomerate. We construct pairwise coagglomeration indices for US manufacturing industries from the Economic Census. We then relate coagglomeration levels to the degree to which industry pairs share goods, labor, or ideas. To reduce reverse causality, where collocation drives input-output linkages or hiring patterns, we use data from UK industries and from US areas where the two industries are not collocated. All three of Marshall's theories of agglomeration are supported, with input-output linkages particularly important.

11. Glaeser E. L., Gyourko J. (2005) Urban decline and durable housing, Journal of Political Economy, 113(2): 345–76. doi JStor pdf

Urban decline is not the mirror image of growth, and durable housing is the primary reason the nature of decline is so different. This paper presents a model of urban decline with durable housing and verifies these implications of the model: (1) city growth rates are skewed so that cities grow more quickly than they decline; (2) urban decline is highly persistent; (3) positive shocks increase population more than they increase housing prices; (4) negative shocks decrease housing prices more than they decrease population; (5) if housing prices are below construction costs, then the city declines; and (6) the combination of cheap housing and weak labor demand attracts individuals with low levels of human capital to declining cities.

12. Glaeser E. L., Kahn M., Rappaport J. (2008) Why do the poor live in cities: The role of public transportation, Journal of Urban Economics, 63(1): 1–24. doi pdf

More than 19 percent of people in American central cities are poor. In suburbs, just 7.5 percent of people live in poverty. The income elasticity of demand for land is too low for urban poverty to come from wealthy individuals' wanting to live where land is cheap (the traditional explanation of urban poverty). A significant income elasticity for land exists only because the rich eschew apartment living, and that elasticity is still too low to explain the poor's urbanization. The urbanization of poverty comes mainly from better access to public transportation in central cities.

13. Glaeser E. L., Kolko J., Saiz A. (2001) Consumer city, Journal of Economic Geography, 1(1): 27– 50. doi pdf

Urban economics has traditionally viewed cities as having advantages in production and disadvantages in consumption. We argue that the role of urban density in facilitating consumption is extremely important and understudied. As firms become more mobile, the success of cities hinges more and more on cities' role as centres of consumption. Empirically, we find that high amenity cities have grown faster than low amenity cities. Urban rents have gone up faster than urban wages, suggesting that the demand for living in cities has risen for reasons beyond rising wages. The rise of reverse commuting suggests the same consumer city phenomena.

14. Helsley R., Strange W. (1990) Matching and agglomeration economies in a system of cities. Regional Science and Urban Economics, 20(2): 189–212. doi pdf

This paper examines resource allocation in a system of cities with heterogenous workers and firms and imperfect information. We derive an agglomeration economy in the labor market from a matching process between workers and firms, and show that it has the characteristics of a local public good. We illustrate two externalities associated with firm location, and show that they render free entry equilibria inefficient. We analyze the formation of equilibrium cities as a game, and argue that since profit maximizing land developers cannot control the number of firms directly, they cannot attain efficient city sizes.

15. Henderson J. (2003) Marshall's scale economies, Journal of Urban Economics, 53(1): 1–28. doi pdf

Using panel data this paper estimates plant level production functions for machinery and high-tech industries that allow for scale externalities from other plants in the same industry locally and from the scale or diversity of local economic activity outside the own industry. The paper finds that the count of other own industry plants, representing a count of local information spillover sources, has strong productivity effects in high tech but not machinery industries. Single plant firms both benefit more from and generate greater external benefits than corporate plants, given their greater reliance on external environments. On dynamic externalities, high-tech single plant firms benefit also from the scale of past own industry activity. I find little evidence of economies from the diversity or scale of local economic activity outside the own industry.

16. Henderson V., Becker R. (2000) Political Economy of City Sizes and Formation." Journal of Urban Economics, 48(3): 453–84. doi pdf

There are two paradigms of city formation and size – the competitive model of large-scale land developers operating in national land markets and the self-organization model of agglomeration. This paper examines the effects of local politics, urban classes, and restrictions in national land markets on city size and formation. It starts by introducing local politics into the two paradigms. Then it turns to a growth situation, where land developers initiate new settlements, but existing cities are either self-organized or governed locally. The paper also examines the politics of local no-growth movements and of governance of specially favored mega-cities.

17. Holmes T. (2005) Location of sales offices and the attraction of cities. Journal of Political Economy, 113(3): 551–81. JStor pdf

This paper examines how manufacturers locate sales offices across cities. Sales office costs are assumed to have four components: a fixed cost, a frictional cost for out‐of‐town sales, a cost‐reducing knowledge spillover related to city size, and an idiosyncratic match quality for each firm‐city pair. A simple theoretical model is developed and is estimated using data from the Census of Wholesale Trade. The factors emphasized in the home market effect literature, namely, fixed costs and frictional costs, are found to play an important role in location decisions. Match quality also matters. The results for knowledge spillovers are mixed.

18. Maurel F., Sédillot D. (1999) A measure of the geographic concentration in French manufacturing industries, Regional Science and Urban Economics, 29(5): 575–604. doi pdf

The purpose of this paper is to offer an empirical investigation of the geographic concentration of French industries. The index of concentration is derived from a location model in the line of Ellison and Glaeser (1994, 1997) and can be interpreted as the correlation between the location decisions of two business units in the same industry. Along with extractive and traditional industries, some high technology industries are highly localized, which supports the view that technological spillovers may be important. Besides, the identification of the most and least localized industries reveals similar patterns in France and in the U.S.

19. Murata Y., Thisse J.-F. (2005) A simple model of economic geography à la Helpman-Tabuchi, Journal of Urban Economics, 58(1): 137–55. doi pdf

This paper explores the interplay between commodities' transportation costs and workers' commuting costs within a general equilibrium framework à la Dixit–Stiglitz. Workers are mobile and choose a region where to work as well as an intraurban location where to live. We show that a more integrated economy need not be more agglomerated. Instead, low transportation costs lead to the dispersion of economic activities. This is because workers are able to alleviate the burden of urban costs by being dispersed, while retaining a good access to all varieties. By contrast, low commuting costs foster the agglomeration of economic activities.

20. Rosenthal S. S., Strange W. C. (2001) The determinants of agglomeration, Journal of Urban Economics, 50(2): 191–229. doi pdf

This paper examines the microfoundations of agglomeration economies for U.S. manufacturing industries. Using industries as observations, we regress the Ellison–Glaeser (G. Ellison and E. Glaeser, 1997, J. Polit. Econ., 105, 889–927) measure of spatial concentration on industry characteristics that proxy for the presence of knowledge spillovers, labor market pooling, input sharing, product shipping costs, and natural advantage. The analysis is conducted separately at the zipcode, county, and state levels. Results indicate that proxies for labor market pooling have the most robust effect, positively influencing agglomeration at all levels of geography. Proxies for knowledge spillovers, in contrast, positively affect agglomeration only at the zipcode level. Reliance on manufactured inputs or natural resources positively affects agglomeration at the state level but has little effect on agglomeration at lower levels of geography. The same is true for the perishability of output, a proxy for product shipping costs.