Chapter

New Evidence on Trends in the Cost of Urban Agglomeration

Edited by Matthew E. Kahn

in Agglomeration Economics

Published by University of Chicago Press

Published in print April 2010 | ISBN: 9780226297897
Published online February 2013 | e-ISBN: 9780226297927 | DOI: http://dx.doi.org/10.7208/chicago/9780226297927.003.0012
New Evidence on Trends in the Cost of Urban Agglomeration

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Congestion, pollution, and crime represent three important factors that discourage urban agglomeration. This chapter examines how the population elasticity of producing local public bads such as crime, pollution, and commute times has changed over time and how it varies across U.S. census regions. It shows significant geographical variation in the relationship between ambient air pollution and population size, and between crime and population size, using a production function approach to estimate how city size is associated with local public bads at different points in time and across U.S. regions. The results complement a recently revealed preference literature that has used cross-city hedonic approaches to infer city quality of life. A hedonic approach that solely focuses on conducting a separable decomposition by teasing out each of these effects individually is likely to underestimate the overall impact of these factors on urban quality of life. The net effect of crime and pollution reductions is stronger cities. This reduction in the cost of “city bigness” means that cities can grow and enjoy the beneficial effects of agglomeration.

Keywords: urban agglomeration; pollution; population size; congestion; U.S. census regions

Chapter.  5374 words.  Illustrated.

Subjects: Microeconomics

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