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RESEARCH PRODUCT

On the emergence of the urban phenomenon. Part I

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In this paper we develop a relatively simple but general model describing the formation of urban agglomerations in a pre-industrial setting. Rural agglomeration on a local scale arises from the multiplication and specialization of intermediate goods and labor services, while dispersion is due to the commuting costs of agricultural workers. Urban agglomeration on a more global scale stems from the trade-off between increasing returns to scale and transport costs of goods. We derive a general equilibrium model of the formation of urban structures and show how population growth, strict indivisibilities and structural changes in the production sector can modify quantitatively and qualitatively the resulting urban configuration.