The Dynamics of City Formation: Finance and Governance.
This Paper examines city formation in a country whose urban population is growing steadily over time, with new cities required to accommodate this growth. In contrast to most of the literature there is immobility of housing and urban infrastructure, and investment in these assets is taken on the bas...
| Main Authors: | , |
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| Format: | Working paper |
| Language: | English |
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CEPR
2004
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| _version_ | 1826289449310355456 |
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| author | Henderson, J Venables, A |
| author_facet | Henderson, J Venables, A |
| author_sort | Henderson, J |
| collection | OXFORD |
| description | This Paper examines city formation in a country whose urban population is growing steadily over time, with new cities required to accommodate this growth. In contrast to most of the literature there is immobility of housing and urban infrastructure, and investment in these assets is taken on the basis of forward-looking behaviour. In the presence of these fixed assets cities form sequentially, without the population swings in existing cities that arise in current models. Equilibrium city size, absent government, may be larger or smaller than is efficient, depending on how urban externalities vary with population. Efficient formation of cities involves local government borrowing to finance development. The institutions governing land markets, leases, local taxation, and local borrowing and debt affect the efficiency of outcomes. The Paper explores the effects of different fiscal constraints, and shows that borrowing constraints lead cities to be larger than is efficient. |
| first_indexed | 2024-03-07T02:29:03Z |
| format | Working paper |
| id | oxford-uuid:a69ba347-70f1-4935-b8da-5c9a1ca07917 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T02:29:03Z |
| publishDate | 2004 |
| publisher | CEPR |
| record_format | dspace |
| spelling | oxford-uuid:a69ba347-70f1-4935-b8da-5c9a1ca079172022-03-27T02:48:29ZThe Dynamics of City Formation: Finance and Governance.Working paperhttp://purl.org/coar/resource_type/c_8042uuid:a69ba347-70f1-4935-b8da-5c9a1ca07917EnglishDepartment of Economics - ePrintsCEPR2004Henderson, JVenables, AThis Paper examines city formation in a country whose urban population is growing steadily over time, with new cities required to accommodate this growth. In contrast to most of the literature there is immobility of housing and urban infrastructure, and investment in these assets is taken on the basis of forward-looking behaviour. In the presence of these fixed assets cities form sequentially, without the population swings in existing cities that arise in current models. Equilibrium city size, absent government, may be larger or smaller than is efficient, depending on how urban externalities vary with population. Efficient formation of cities involves local government borrowing to finance development. The institutions governing land markets, leases, local taxation, and local borrowing and debt affect the efficiency of outcomes. The Paper explores the effects of different fiscal constraints, and shows that borrowing constraints lead cities to be larger than is efficient. |
| spellingShingle | Henderson, J Venables, A The Dynamics of City Formation: Finance and Governance. |
| title | The Dynamics of City Formation: Finance and Governance. |
| title_full | The Dynamics of City Formation: Finance and Governance. |
| title_fullStr | The Dynamics of City Formation: Finance and Governance. |
| title_full_unstemmed | The Dynamics of City Formation: Finance and Governance. |
| title_short | The Dynamics of City Formation: Finance and Governance. |
| title_sort | dynamics of city formation finance and governance |
| work_keys_str_mv | AT hendersonj thedynamicsofcityformationfinanceandgovernance AT venablesa thedynamicsofcityformationfinanceandgovernance AT hendersonj dynamicsofcityformationfinanceandgovernance AT venablesa dynamicsofcityformationfinanceandgovernance |