Public services and agglomeration effect under spatial structure: Threshold verification on the provincial capital...

Area of Science:

• Urban and Regional Economics
• Public Finance
• Spatial Economics

Background:

• Local governments often underutilize agglomeration economies due to suboptimal public service expenditure allocation.
• Understanding the interplay between public services and agglomeration is crucial for effective urban development.

Purpose of the Study:

• To analyze the relationship between public service expenditure and agglomeration economies through spatial structure.
• To investigate how public service expenditure influences urban expansion and agglomeration effects in different spatial structures.
• To provide guidance for optimizing public service expenditure allocation in Chinese provincial capitals.

Main Methods:

• Developed a general equilibrium model to link public service expenditure and agglomeration effects.
• Categorized regions into monocentric and polycentric spatial structures.
• Utilized 2S-GMM and PTR methods on data from 31 Chinese provincial capitals to analyze relationships and threshold effects.

Main Results:

• Public service expenditure, in both scale and structure, positively impacts the agglomeration economy.
• In monocentric areas, urban scale changes are key when considering public service expenditure's effect on agglomeration.
• In polycentric areas, the scale of public services in secondary cities is crucial for agglomeration effects.

Conclusions:

• The study enhances theoretical understanding of how spatial structure mediates the impact of public service expenditure on agglomeration.
• Findings offer practical insights for local governments on allocating public service expenditure to maximize agglomeration benefits.
• Tailored strategies for monocentric and polycentric regions are necessary for effective urban development and economic growth.