Does Urban Agglomeration Promote the Development of Cities? Evidence from the Urban Network Externalities

Abstract

This paper discusses whether urban agglomeration can promote urban growth from the perspective of network externalities. Although agglomeration externalities play an important role in promoting regional development, improved accessibility makes urban network externalities an influential force in reshaping regional economic growth. This paper identifies the urban network based on the data of train frequency and travel time data among 271 cities in China. Then, the spatial Durbin model is used to investigate the effect of urban agglomeration on economic growth from the perspective of urban network externalities. The results demonstrate that there are significant network externalities among cities in China, which play a pivotal role in boosting urban growth. Interactions among cities produce cross-regional spillovers, causing network externalities to no longer be dependent on geographical proximity. This is significantly different from agglomeration externalities that are limited to a certain regional scale. As the scope of the urban network expands, network externalities become more pronounced. Different regional characteristics all lead to heterogeneous results of network externalities. The construction of high-speed railways, as well as the well-developed urban network system, strengthen the positive impact of network externalities. Smaller cities benefit more from higher-level urban networks than regional networks.