Nagamachi, Kohei

Taking account of the increasing importance of task trade in urban contexts, this paper provides a model of a system of cities in which ex ante identical locations specialize in tasks that differ in their skill intensity, resulting in a unique size distribution of cities. The necessary and sufficient condition for a power law including Zipf's law is derived, and a quantitative analysis shows that the model is consistent with the size distribution of U.S. cities. A welfare analysis is also conducted, suggesting excess agglomeration with sizable welfare loss under laissez-faire.