Does Palembang City’s Population Growth Affect Optimal City Size: Minimum Cost and Maximum Net Benefit Approach?

Abstract

—-This paper discusses the optimization of the size of Palembang City economically in accordance with the Alonso- Richardson Hypothesis, using a minimum cost and a maximum net benefit approach. The variables used to calculate optimal city measurements are the number of residents, the cost of the city management and the value of benefits for the citizens of the city. The research period is 2007-2017. The research uses descriptive and exploratory research methods by testing or proving theories to measure the optimization of city size. Hypothesis testing is done with economic modeling, namely the Multiple Linear Regression equation model with the least-squares method. The results showed that the variable population and population growth significantly affected the cost of city management and the benefits received for the residents of Palembang City, namely the creation of the Gross Regional Domestic Product (GRDP).