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SERC/Urban and Spatial Programme Discussion Paper
Spatial Costs in a Monocentric City (And Implications for Agglomeration)
Hugh B. Wenban-Smith
October 2009
Paper No' SERCDP0032:
Full Paper (pdf)

JEL Classification: R12; R32; D24; L95

Tags: urbanisation; spatial analysis; returns to scale; water utilities

Using water supply as a model for a wider range of infrastructure services, the effect of a negative exponential density gradient on distribution costs is investigated for four monocentric urban development scenarios: (a) Densification; (b) Dispersion; (c) Suburbanisation; and (d) Constant density. It is shown that economies of scale in production can be outweighed by diseconomies in distribution in cases (b) and (c), suggesting that the agglomeration benefits of infrastructure cannot be taken for granted. They depend as much on the effect of density on distribution costs as the effect of size on production costs.