On the Effect of Over-centralization to the Effective Demand

In the present age, urban population holds the majority of the general

population in a country. Various activities in the urban area give large

influence to economy of a country.

In this paper we can show that the spatial structure such as the

transportation cost or the land rent influences macro economy. The purpose

of our study is theoretical analysis for the influence that over-centralization

gives to effective demand and offering of a theoretical framework in urban

policy. Ono(1994) showed a model that could explain recession theoretically

using liquidity of money. In this paper we show the possibility that

over-centralization more than one scale decreases effective demand.