Competition, Land Prices, and City Size

Arbeitspapier

Larger cities typically give rise to two opposite effects: tougher competition among firms and higher production costs. Using an urban model with substitutability of production factors and pro-competitive effects, I study the response of the market outcome to city size, land-use regulations, and commuting costs. For industries with low input shares of land, larger cities host more firms setting lower prices whereas for sectors with intermediate land shares larger cities accommodate more firms charging higher prices. Softer land-use regulations and/or lower commuting costs reinforce pro-competitive effects, making larger cities more attractive for residents via lower prices and broader product diversity.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 7727

Classification and Topics

• Classification: Wirtschaft ; Production, Pricing, and Market Structure; Size Distribution of Firms ; Oligopoly and Other Imperfect Markets ; General Equilibrium and Welfare Economic Analysis of Regional Economies ; Other Spatial Production and Pricing Analysis ; Regional Government Analysis: Land Use and Other Regulations
• Subject: land prices ; pro-competitive effects ; city size ; product diversity ; land-use regulations

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kichko, Sergey
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/201953
• Last update: 10.03.2025, 11:42 AM CET