MARKET STRUCTURE, AGGLOMERATION AND SYSTEMS OF CITIES IN SPATIAL ECONOMIES

This thesis analyzes the impacts of different factors of agglomeration on types and sizes of cities and presents a model of a system of cities in a spatial economy. Differences in types and sizes of cities have been partly attributed to the degree of scale economies due to agglomeration. However, the impacts of industrial structure and interaction between related industries within the city as a major factor of agglomeration has not been analyzed. The first objective of this thesis is to extend and modify the existing theory of city size by explicitly incorporating industrial interaction along with scale economies in an equilibrium and optimum land use model. In one of the cities within the system gross product technological externalities, a type of urbanization economies, are the dominant force. Localization economies are the dominant force in the other city. The equilibrium model presents an explanation for urban hierarchies in a spatial economy. The second objective of this thesis is to fill the gap between the two extreme cases of market structure, monopolistic and perfectly competitive, as well as to present the important role of the service sector in the formation of cities. Within the framework of a model of product differentiation and monopolistic competition, the impact of the interaction between a monopolistic competitive service sector and a perfect competitive traded good sector in a city is analyzed. The third objective in this thesis is to present an integrated approach to the formation of cities. It is shown that in a system of two cities with no trade, at equilibrium, all workers may not concentrate in the city with more product variety. Finally, a new explanation is provided for the structure of a system of cities where the interactions between cities are explicitly taken into consideration, as well as the determination of an equilibrium number of cities. (Abstract shortened with permission of author.