Discussion Paper No.1903

Abstract :
In this study, we considered the role of intercity dependence in the era of depopulation, where congestion matters little for some regions. Using a simple two-city migration model with consumer optimization, we identified three factors that support intercity dependence: complementarity between services in di¤erent cities, preference of consumers for consumption when travelling, and the quality of intercity transportation. If these three factors adequately support intercity dependence, we found that two cities can permanently coexist in equilibrium even if there is a significant population loss at the aggregate level.

Keywords : Multiple cities; optimal city size; interdependence; transportation; population decline

JEL code: O18, P25, R12