Polycentric urban development and urban amenities: Evidence from Chinese cities

The recent literature on the “consumer city” and the “love of variety” argues that the provision of urban amenities makes a city more attractive. Meanwhile, polycentric urban development has been highlighted by academics and policymakers as a sustainable urban development regime, although its purported benefits need to be further investigated. Against this background, this paper empirically examines the relationship between polycentricity and the provision of urban amenities in 309 Chinese cities. After controlling for the size, population density, wage, and human capital, this paper finds that a higher degree of intra-urban polycentricity is associated with a larger number of urban amenities. Additionally, when all the covariates above are held, a higher degree of intra-urban polycentricity is associated with a greater diversity of urban amenities. Robust checks show that these findings are consistent with different polycentricity indices and diversity measures. Finally, possible explanations of the relationship between intra-urban polycentricity and urban amenities are provided from both the producer and consumer perspectives.

Quality Matters: Monopolistic Competition with Heterogeneous Consumers

The paper builds a two-sector monopolistic competition model featuring multi-product firms and heterogeneous consumers endowed with a Cobb–Douglas utility nesting a generalized CES function. In contrast to the standard CES, the generalized CES function includes both the love of variety and the love for product quality, which makes it possible to distinguish consumers differing in their product quality perception. The industrial sector encompasses firms producing differentiated products of varied quality, targeting a certain type of consumer. In such a case, firms set the price and quality for a particular product so as to maximize their profits, while consumers find the optimum price-quality combination, which may be different for groups of consumers having different preferences. The model allows one to derive the demand functions of heterogeneous consumers for goods of different quality and makes it possible to analyze different strategies of firms in their choice of the optimal price-quality ratio for their products. It also allows the formulation of conditions for screening in the case of incomplete information about the type of consumers. The main difference between the equations for screening in the model of monopolistic competition and the standard screening models in theory of contracts lies in the absence of individual rationality restrictions in the monopolistically competitive setting, where only the incentive compatibility is taken into account for both groups of consumers. As a result, in the absence of additional restrictions on the part of the regulatory authorities, the screening procedure in the monopolistic competition setting leads to a decrease in welfare for less affluent consumers.