Urban subcenter formation

Abstract

This paper presents a series of dynamic models of urban subcenter formation. The models have three common ingredients: first, a planner allocates a growing population to one of two production locations; second, public capital (infrastructure) must be installed prior to development of a production site; third, there are external scale economies in production and diseconomies of scale in transportation. The models show how, in a growing city, subcenters arise from the tradeoff between external scale economies in production and diseconomies in transportation. The models also show how the development of subcenters is affected by (1) the fixed costs of public capital, (2) differences in production technologies, and (3) interactions between production locations.