In the section Surveys
Title of the article Why Cities Emerge and Grow? Explanations of Theoretical and Empirical Studies
Pages 134–153
Author Eugenia Anatolyevna Kolomak
Doctor of Economics
Institute of Economics and Industrial Engineering of the Siberian Branch of the Russian Academy of Sciences
17 Prospect Akademika Lavrentyeva, Novosibirsk, Russia, 630090
Novosibirsk National Research State University
1 Pirogova Street, Novosibirsk, Russia, 630090
This email address is being protected from spambots. You need JavaScript enabled to view it.
ORCID: 0000-0002-2230-852X
Abstract The article presents the results of theoretical and empirical studies devoted to looking into reasons of creation and success of the cities. The foundation of cities’ growth is the mechanisms of supporting spatial concentration of economic activity. The author studies two key elements of these processes in the framework of microeconomic theory: the increasing returns to scale and external agglomeration effects. Returns to scale are defined by technology, tied to the indivisibility and discretion of output, and are an internal factor not connected with external environment. Agglomeration economy looks into benefits of interacting with agents nearby. The advantages of cities and sources of their development are explained mainly by the agglomeration economy and externalities, divided into localization and urbanization effects. Several mechanisms of explaining city agglomeration economy can be highlighted: 1) distribution of risk; 2) shared usage of indivisible goods; 3) shared usage of a large market of various raw materials and production factors; 4) coordination of skills and work; 5) education, experimentation and accumulation of knowledge. Stability and growth of the cities is defined by combination of factors that have technological and institutional nature. The increasing returns to scale and external effects are supported and strengthened by the market mechanism. As a result, the cities have advantages in creation and shared usage of large output, in generation and distribution of innovations; use the benefits of a wide market, diversity and narrow specialization
Code 332.01
JEL O18, P25, R12
DOI 10.14530/se.2018.2.134-153
Keywords city ♦ scale economy ♦ agglomeration economy ♦ sharing ♦ distribution ♦ matching ♦ learning
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For citation Kolomak E.A. Why Cities Emerge and Grow? Explanations of Theoretical and Empirical Studies. Prostranstvennaya Ekonomika = Spatial Economics, 2018, no. 2, pp. 134–153. DOI: 10.14530/se.2018.2.134-153. (In Russian).
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