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Journal Articles Review of Economic Studies Year : 2019

The Cost of Agglomeration: Land Prices in Cities

Abstract

We develop a new methodology to estimate the elasticity of urban costs with respect to city population using French house and land price data. After handling a number of estimation concerns, we find that the elasticity of urban costs increases with city population with an estimate of about 0.03 for an urban area with 100,000 inhabitants to 0.08 for an urban area of the size of Paris. Our approach also yields a number of intermediate outputs of independent interest such as the share of housing in expenditure, the elasticity of unit house and land prices with respect to city population, and within-city distance gradients for house and land prices.
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Dates and versions

halshs-01938356 , version 1 (11-02-2022)

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Pierre-Philippe Combes, Gilles Duranton, Laurent Gobillon. The Cost of Agglomeration: Land Prices in Cities. Review of Economic Studies, 2019, 86 (4), pp. 1556-1589. ⟨10.1093/restud/rdy063⟩. ⟨halshs-01938356⟩
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