NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade and Circuses: Explaining Urban Giants

Alberto F. Ades, Edward L. Glaeser

NBER Working Paper No. 4715
Issued in April 1994
NBER Program(s):   EFG

Using theory, case studies, and cross-country evidence, we investigate the factors behind the concentration of a nation's urban population in a single city. High tariffs, high costs of internal trade, and low levels of international trade increase the degree of concentration. Even more clearly, politics (such as the degree of instability) determines urban primacy. Dictatorships have central cities that are, on average, 50 percent larger than their democratic counterparts. Using information about the timing of city growth, and a series of instruments, we conclude that the predominant causality is from political factors to urban concentration, not from concentration to political change.

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Published: Quarterly Journal of Economics, Vol. 110, no. 1 (1995): 195-227.

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