The optimal distribution of population across cities

David Albouy, Kristian Behrens, Frédéric Robert-Nicoud, Nathan Seegert

Research output: Contribution to journalArticlepeer-review


We develop an urban model that incorporates: (1) heterogeneous sites; (2) fiscal and urban externalities; and (3) an endogenous number of cities, i.e., the extensive margin of urban development. Within- and across-city decreasing returns to scale cause agents to perceive their city as being too large in the socially optimal allocation. As a consequence, in equilibrium the largest cities on the most amenable sites are undersized, whereas the smaller cities on less amenable sites are oversized. We propose a test for optimal city size with heterogeneous sites extending the Henry George Theorem.

Original languageEnglish (US)
Pages (from-to)102-113
Number of pages12
JournalJournal of Urban Economics
StatePublished - Mar 2019


  • Fiscal wedges
  • Henry George Theorem
  • Local governments
  • Optimal and equilibrium city sizes

ASJC Scopus subject areas

  • Economics and Econometrics
  • Urban Studies


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