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Urban growth and subcenter formation: A trolley ride from the Staples Center to Disneyland and the Rose Bowl

2007; Elsevier BV; Volume: 63; Issue: 2 Linguagem: Inglês

10.1016/j.jue.2007.04.009

1095-9068

Marcus Berliant, Ping Wang,

Fiscal Policy and Economic Growth

The long-term trends of urbanization suggest: not only have more cities formed, but the leading metropolises have grown larger, with a number of peripheral subcenters developing over time. Conventional models of urban growth are limited, in that commuting cost and congestion eventually result in decreasing returns in a monocentric city as population becomes very large. We construct a general-equilibrium model with dynamic interactions between spatial agglomeration and urban development, driven by location-dependent knowledge spillovers. Our contribution allows endogenous development of subcenters to capture benefits from knowledge spillovers and offset diminishing returns from urban congestion, thus permitting more sustained city growth.