Larger cities typically give rise to two opposite effects: tougher competition among firms and higher production costs. Using an urban model with substitutability of production factors and pro-competitive effects, I study the response of the market outcome to city size, land-use regulations, and...

There are two paradigms of city formation and size-the competitive model of large-scale land developers operating in national land markets and the self-organization model of agglomeration. This paper examines the effects of local politics, urban classes, and restrictions in national land markets...