TRANSPORT NETWORK AND SYSTEM OF CITIES

This paper presents a general equilibrium model of a multi-city econom y where cities are linked by a transport network. In the economy, ther e are many industrial sectors and some of them are subject to agglomer ation economies. The model determines city size distribution (i.e., po pulation in each city), industrial location (i.e., type of industry, l evel of output in each city), inter-city trade patterns, wages, prices of goods, land rent, and the utility level of households. Numerical s imulations are conducted to investigate how different transport networ k patterns affect city size distribution and the welfare of households . It is shown that improvement in the transport network (for example, construction of highway) induces concentration of firms and households in a particular city, and that such concentration significantly incre ases welfare. Furthermore, different historical paths of network impro vement may cause drastically different city size distributions. (C) 19 97 Academic Press.