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Does the Henry George Theorem Provide a Practical Guide to Optimal City Size?

Richard Arnott
The American Journal of Economics and Sociology
Vol. 63, No. 5 (Nov., 2004), pp. 1057-1090
Stable URL: http://www.jstor.org/stable/3488064
Page Count: 34
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Does the Henry George Theorem Provide a Practical Guide to Optimal City Size?
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Abstract

The spatial distribution of economic activity is determined by a balancing of increasing and decreasing returns to scale activities. The Henry George Theorem states roughly that, if economic activity is efficiently organized over a "large" space, aggregate land rents equal the aggregate losses from the decreasing returns to scale activities. Kanemoto, Ohkawara, and Suzuki have tentatively applied the Henry George Theorem to investigate whether Tokyo has too large a population. This paper has two aims. The first is to explore the Theorem and its generality; the second is to examine whether it provides a promising conceptual foundation for estimating whether particular cities are over- or underpopulated.

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