Chapter 14Urban Agglomeration Through the Diffusion of Investment Impacts

Minette D'Lima, Francesca R. Medda and Alan G. Wilson

14.1 Introduction

Disentangling the reasons behind urban agglomeration is crucial to understanding how a city is the product of competition and collaboration between various urban agencies. Agglomeration can arise from investment in utilities, clustering of firms and proximity of labour and knowledge (Drennan and Kelly, 2011; Rabianski and Gibler, 2007; Rosenthal and Strange, 2004; Storper and Venables, 2004). The implication of this evidence is that the formation of urban agglomeration can be modelled as the creation of peaks of population concentration which are triggered by these different factors. Against this background, we use as the point of departure the model developed by Medda et al. (2009): urban concentration patterns are created by the diffusion of rent and transport costs in a continuous urban space. This urban economic model is in turn based on the Turing morphogenetic reaction–diffusion model and incorporates the diffusion of information, for example transport investment, along with its feedbacks. The model demonstrates the emergence of spatial patterns, such as urban agglomeration, as a result of external investment.

In the Medda et al. model, the city is assumed to be circular and divided into discrete zones with an additional central business district (CBD). The assumptions on the costs incurred by a household in a given zone are: ...

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