A Dynamic Spatial Model of Rural-Urban Transformation with Public Goods
This paper develops a dynamic model that
explains the pattern of population and production allocation
in an economy with an urban location and a rural one.
Agglomeration economies make urban dwellers benefit from a
larger population living in the city and urban firms become
more productive when they operate in locations with a larger
labor force. However, congestion costs associated with a too
large population size limit the process of urban-rural