The Henry George Theorem (HGT) states that, in first-best economies, the fiscal surplus of a city government that finances the Pigouvian subsidies for agglomeration externalities and the costs of local public goods by a 100% tax on land is zero at optimal city sizes. We extend the HGT to...

The Henry George Theorem (HGT), or the golden rule of local public finance, states that, in first-best economies, the fiscal surplus, defined as aggregate land rents minus aggregate losses from increasing returns to scale activities, is zero at optimal city sizes. We derive a general second-best...

In this chapter we look at the spatial distribution of economic activities in China and Japan. Japan has excellent data and relatively uniform institutions since World War II, which allow us to track its spatial evolution and detail its key features today. For Japan we show how structural shifts...