Corresponding author: Wen-Tai Hsu, Department of Economics, National University of Singapore, Faculty of Arts & Social Sciences, AS2 Level 6, 1 Arts Link, Singapore 117570. Email: email@example.com.
This article was previously circulated under the title ‘Central Place Theory and Zipf’s Law’. I am grateful to Tom Holmes, Sam Kortum and Erzo G. J. Luttmer for their advice and continuous support. For their helpful comments, I thank Marcus Berliant, V.V. Chari, Jiahua Che, Gilles Duranton, Jan Eeckhout, Masa Fujita, Xavier Gabaix, Luis Garicano, Yannis Ioannides, Patrick Kehoe, James Mirrlees, Tomoya Mori, Roger Myerson, Derek Neal, Shi Qi, Esteban Rossi-Hansberg, Maryam Saeedi, Robert Shimer, Tony E. Smith, Takatoshi Tabuchi, Matthew Turner, Harald Uhlig, Ping Wang, William Wheaton, two anonymous referees, and the seminar participants at University of Minnesota, Federal Reserve Bank of Minneapolis, University of Chicago, University of Toronto, Kyoto University, National Graduate Institute for Policy Studies, City University of Hong Kong, Chinese University of Hong Kong, Fudan University, the 2008 Annual Meeting of the American Real Estate and Urban Economics Association, the EITSS conference of Nagoya University, and the 2009 Meeting of the Urban Economics Association. All errors are mine.