In this paper we argue that the impact
of external scale economies and diseconomies on city size is not nearly
as clear--cut as it is tacitly believed in urban economics. Similarly,
that city--size distortions are not caused by externalities alone.
Noncovexity, which prevents establishing the `right' number of cities,
may represent a source for city--size distortions which
can be stronger than the standard
resource misallocation resulting from external scale economies and diseconomies.
It follows that a direct population dispersion policy is not just an inferior
substitute to Pigovian taxes and subsidies but rather a useful complement. |
