. Determination of optimal population densities underlies the economic rationality when planning the provision of basic public infrastructure by local governments. Using econometric techniques based on the translog cost function, we investigate the existence of economies of scale, associated to a larger urban size in terms of population and housing, determine the effect of alternative urban patterns – compact or dispersed – on the cost of provision, and calculate optimal population densities as targets for urban planning. We illustrate the practicality of our model using Spanish municipal data, and unveil latent economies of scale and suboptimal urban densities due to excessive dispersion. Based on these findings we propose specific policy guidelines in terms of desirable urban structures.

Resource management, regional governments, cost economies, population density, translog cost function
Econometric Methods: Multiple/Simultaneous Equation Models; Multiple Variables (jel C3), Production; Capital and Total Factor Productivity; Capacity (jel D24), Structure and Scope of Government (jel H1), Publicly Provided Goods (jel H4), Public Facility Location Analysis; Public Investment and Capital Stock (jel R53)
dx.doi.org/10.1111/pirs.12096, hdl.handle.net/1765/130934
Papers in Regional Science
Department of Technology and Operations Management

Prieto, A.M., Zofio Prieto, J.L, & Alvarez, I. (2014). Cost economies, urban patterns and population density: The case of public infrastructure for basic utilities. Papers in Regional Science, 94(4), 795–816. doi:10.1111/pirs.12096