On the Location and 'Lock-In' of Cities : Geography vs. Transportation Technology

We investigate where cities are located in a spatial economy and why they tend to get 'locked-in' at particular sites. Building on Fujita and Krugman (1995) we show that geography and/or transportation technology must exhibit some 'non-smoothness' for cities to possibly become 'locked-in' in location space. Our results establish that no asymmetric monocentric equilibrium can be generically sustained when space is homogenous and transportation technologies are 'smooth', whereas it can in the presence of transportation hubs and/or concave transport cost functions. This suggests that cities are drawn to transportation hubs during the early stages of economic development, whereas they can be sustained almost everywhere during later stages