Albouy, David. <br/><br/>
The Optimal Distribution of Population across Cities / 
David Albouy, Kristian Behrens, Frédéric Robert-Nicoud, Nathan Seegert. 
 - Cambridge, Mass.  National Bureau of Economic Research  2016. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w22823 .
 - Working Paper Series (National Bureau of Economic Research)  no. w22823. .
<br/><br/> November 2016. 
<br/><br/> The received economic wisdom is that cities are too big and that public policy should limit their sizes. This wisdom assumes, unrealistically, that city sites are homogeneous, migration is unfettered, land is given freely to incoming migrants, and federal taxes are neutral. Should those assumptions not hold, large cities may be inefficiently small. We prove this claim in a system of cities with heterogeneous sites and either free mobility or local governments, where  agglomeration economies, congestion, federal taxation, and land ownership create wedges. A quantitative version of our model suggests that cities may well be too numerous and underpopulated for a wide range of plausible parameter values. The welfare costs of free migration equilibria appear small, whereas they seem substantial when local governments control city size. 
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