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Transactions and Cities

  • Sheng HongEmail author
Chapter
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Abstract

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.

Keywords

City Transaction Congregation Institutions 

References

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Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.Unirule Institute of EconomicsBeijingChina

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