A friend wrote in to ask, “Can more than a handful of charter cities succeed?” The best way to answer his question is to pose a slightly different one. “How many big cities can there be?”

The first question implicitly presumes a winner-take-all competition where only a few cities survive. The increasing returns associated with successful cities tend to encourage this kind of thinking. Big cities seem to have permanent advantages and some types of economic activity concentrate in just a few places. For example, there may only be a handful of major financial capitals like London, New York, Tokyo, and Shanghai.

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Here’s a common objection to the logic behind the proposal for building charter cities in poor host countries:

If investment in urban infrastructure can really generate win-win benefits for investors and residents of poor countries, why isn’t it happening already?

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