Urban agglomeration, land use and population in a dual economy: A general equilibrium analysis with empirical applications

Traditional dual sector models have been used extensively to examine the role of efficient use of inputs in determining the process of urbanization in less developed countries. The existence of net agglomerative benefits in the urban sector is said to have been the critical determinant of the extent of urbanization. However, the relationship between agglomerative economies and the urbanization in a regional economy is not so clear. Furthermore, very little attention has been paid to input fixity, such as fixed land endowment in sectoral activities, and the use of limited resources in managing the process of urbanization in the face of steady growth of population. In this dissertation, I offer an extended dual sector general equilibrium frame-work to address the relationship between agglomerative economies and urbanization, the optimal use of land in sectoral activities and the efficient use of limited resources to promote a balanced course of urbanization in the face of steady population growth. Simulation methods are used to study these issues. I use the Calcutta (India) Metropolitan District as a benchmark economy. Results of my study suggest that the perceived "positive" relationship between agglomerative economies and the urbanization may not be true in a closed economy. Furthermore, the economy may achieve a substantial improvement in the aggregate welfare by reallocating lands in sectoral activities differently than what has been the observed use pattern. This relationship holds true even under the condition where the regional economy is experiencing population growth.