Central Place Theory and City Size Distribution

This article proposes a theory of city size distribution via a hierarchy approach rather than the popular random growth process. It does so by formalising central place theory using an equilibrium entry model and specifying the conditions under which city size distribution follows a power law. The force driving the city size differences in this model is the heterogeneity in economies of scale across goods. The city size distribution under a central place hierarchy exhibits a power law if the distribution of scale economies is regularly varying, which is a general class that encompasses many well-known, commonly used distributions.