Transactions and Cities

  • Sheng HongEmail author


The main objectives of this chapter are to explain the origination, development, density, scale determination, and industry positioning of cities using the concept of transactions and to discuss the impacts of institutional changes and policy improvements on cities. Statistically, transactions can bring about transaction benefits. Pursuing transaction benefits leads people to congregate, which may yield congestion externalities and market-net externalities, and their differences form the congregation rent. Population density may reach the optimal equilibrium when the congregation rent corresponding to the population density is at its maximum, which determines the economic density and scale of the city. The time distribution of the city’s growth process is similar to the economic income change corresponding to the change in population density because the people’s incentive to swarm into cities is proportional to the benefits that they may receive from cities. A larger economic scale results in a stronger congregative effect. Different industries may position from the center of the city to the outside according to their congregative effects from higher to lower that depend on the different optimal economic scales of different industries. Finally, the decrease in non-market transaction costs brought about by institutional changes may affect the density and scale of cities through an impact on the volume of transactions; policy changes may also affect transaction costs and the density and scale of cities. However, such effects may not be as obvious and sustainable as institutional changes.


City Transaction Congregation Institutions 


  1. 笪凤媛和张卫东, “我国 1978–2007 年间非市场交易费用的变化及其估算”, 《数量经济技术经济研究》2009 年第 8 期 (Da Fengyuan and Zhang Weidong, Changes of Non-market Transaction Costs and its Estimation in China from 1978 to 2007, the Journal of Quantitative and Technical Economics, 2009 (8)).Google Scholar
  2. 国家统计局国民经济核算司, 《中国投入产出表(2007年)》, 中国统计出版社, 2009. (Department of National Accounts of the National Bureau of Statistics, China Input-Output Table (2007), China Statistics Press, 2009).Google Scholar
  3. 金玉国, “中国交易费用变动的动态机制和传导路径——一个基于VAR方法的实证研究”, 《财经研究》, 2006 年第12期。(Jin Yuguo, Dynamic Mechanism and Pathway of Change of Transaction Costs in China--an Empirical study based on VAR method, Journal of Finance and Economics, 2006(12)).Google Scholar
  4. 康芒斯, 《制度经济学》, 商务印书馆, 1983. (Translated from: Commons, Institutional Economics: Its Place in Political Economy, Macmillan Company, 1934).Google Scholar
  5. 盛洪, 《分工与交易》, 上海三联书店, 1992. (Sheng Hong, Division of Labor and Transactions, Shanghai Sanlian Publishing Company, 1992).Google Scholar
  6. 藤田昌久, 克鲁格曼和维纳布尔斯, 《空间经济学——城市、区域与国际贸易》, 中国人民大学出版社, 2005. (Translated from: Masahisa Fujita, Krugman, Paul and Venables, Anthony J., The Spatial Economy—Cities, Regions and International Trade, The MIT Press, 1999).Google Scholar
  7. Wallis, John and North, Douglass, Measuring the Transaction Sector in the American Economy, Chapter 3 in Long-Term Factors in American Economic Growth, edited by Stanley L. Engerman and Robert E. Gallman, University of Chicago Press, 1986.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.Unirule Institute of EconomicsBeijingChina

Personalised recommendations