Every city has an optimal size, which depends on the contrast between the positive and negative effects of city size. In reality, the positive effects are mainly the agglomeration effects of urban economy, while the negative effects include traffic congestion, environmental pollution, high house prices, inadequate infrastructure and so on. Economic agglomeration will not only improve labor productivity, but also make urban land and housing prices rise. At this time, the production costs of enterprises and the living costs of residents will rise. Urban overcrowding, pollution and crime will also offset the benefits of urban expansion. Only when the positive effects of a city exceed its production or living costs will enterprises and residents stay in the city.
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The optimal size of a city depends on the balance of positive and negative effects