Optimal city size,land tenure and the economic theory of clubs

In this paper, a connection is made between urban population size in the presence of increasing returns to scale, and the economic theory of clubs. It is shown that under certain conditions, the optimal size of the population is finite and that collective action are transferable concepts from the theory of clubs. The model is also solved in a closed format, i.e., including rent payments as part of total income, under two redistribution schemes. It is shown that the optimal size of the population is independent of the mode of ownership of the urban residential land, when the transportation cost function is linear.