Agglomeration Economies and House Rent

The aim of this paper is to show the quantitative relationship between the urban size and the agglomeration economies in present Japan. This is an approach to measure the urban externalities. The main result is that the agglomeration economies measured by the house rent are proportional to the urban size measured by the number of population (straight line), or increase more gradually than the growth of urban size (upper-wards convex). In the standard rental apartment house, either the rent increases by about 31 yen when the number of population of an area increases by 10 thousand men, or the elasticity of rent to population is about 0.18.