OVERPOPULATION, OPTIMAL CITY SIZE AND THE EFFICIENCY OF URBAN SPRAWL

Abstract

This paper estimates the degree of overpopulation in a city by combining theoretical work on optimal city size with a data-intensive computable general equilibrium model of a medium-sized city (Fort Collins, Colorado). The hypothesized inverted-U of real income per worker in optimal city size literature is reproduced using pecuniary externalities given the unequal distribution of land and capital income to resident households. The results show that household distribution is skewed toward upper income households of overpopulated cities. Policy implications suggest that urban sprawl, increased commuting, and export-oriented retail growth reduce overpopulation leading to efficiency gains, as does export growth in services and total factor productivity growth in manufacturing.