INCOMES,TRADE, AND THE BALANCE OF PAYMENTS WITHIN AN URBAN SYSTEM*

ABSTRACT Attention is initially focused on the principal characteristics of a hierarchical urban system. The structure of trade flows among the various levels of the hierarchy is outlined, and consideration is then given to nontrade flows, these comprising government transfers and capital movements, as well as the associated property-payment flows. An equilibrium model is presented which is concerned with income at each level of the hierarchy. The balance-of-payments implications of the model are explored, and there is a discussion of the manner in which a trade imbalance at a particular level can be sustained in equilibrium.