I’m on vacation, keeping vague track of the news but basically taking a break and spending a lot of time communing with nature. But I’ve also been thinking a bit about economics, taking advantage of psychological distance to ruminate on stuff that isn’t closely connected to the news. And one of the areas I’ve been chewing over goes back to my old stomping ground of economic geography.

In particular, I’ve been trying to clarify my thoughts after reading Emily Badger’s stimulating piece on how megacities seem to have less and less need for smaller cities. I found myself asking what might seem like an odd question: what, in the modern economy, are small cities even for? What purpose do they serve? And this question leads me to a chain of thought that’s a bit different from Badger’s, although not necessarily contradictory.

Once upon a time, it was obvious what towns and small cities did: they served as central places serving a mainly rural population engaged in agriculture and other natural resource-based activities. The rural population was dispersed because arable land and other resources were dispersed, and so you had lots of small cities dotting the landscape.

Over time, however, agriculture has become ever less important as a share of the economy, and the rural population has correspondingly declined as a determinant of urban location. Nonetheless, many small cities survived and grew by becoming industrial centers, generally specialized in some cluster of industries held together by the Marshallian trinity of information exchange, specialized suppliers, and a pool of labor with specialized skills.