| Abstract | Based on summarization of previous studies on city size, this paper probes into the largest, optimal and reasonable sizes of Chinese cities with data from 264 cities at municipal and above levels during 1990-2011. The benefits of city size are considered in three different scenarios, viz. human capital excluded, average years of schooling included, and human capital included. External costs are considered with government costs, labor costs in firms, inflation costs, housing costs and environment costs. This cost-benefit analysis derives the size interval of smallest and largest cities and the optimal city size: the optimal city, or the peak value of net size benefits happen when the population is between 5.56 and 6.14 million, the lowest point of external relative costs corresponds to the population of 5.78 million, and the optimal size is around 6 million. Reasonable size, of which the net benefit is larger than 0.3, is between 1.66 to 24.41 million, and the external relative costs are generally not larger than 0.5. The interval of city size with positive net size benefits is between 0.65 and 35.69 million. Therefore, China does not have too many but too few large cities. Mega-cities like Beijing and Shanghai, although facing traffic jams and environmental pollution, especially serious haze, are still far from their full capacity. |