On spatial systems of cities

Abstract: Are there multiple equilibria in the spatial economy? This paper develops a unified framework that integrates systems of cities and regional models to address this question within a general geographic space. A key feature is the endogenous formation of commuting areas linking a continuum of residential locations to a finite set of potential business districts. Using tools from computational geometry and shape optimization, we derive sufficient conditions for the existence and uniqueness of spatial equilibria. For plausible parameter values, urban location is indeterminate, but, conditional on an urban system, city sizes are uniquely determined. The framework reconciles seemingly conflicting empirical findings on the role of geography and scale economies in shaping the spatial economy.