Borrowed Size of Small and Medium Cities in a Hierarchical Urban System

Abstract Small and medium‐sized cities can benefit from their proximity to large cities through borrowed size and spillover effects. First, geographical proximity may facilitate these effects through spatial diffusion. The closer small‐ and medium‐sized cities are geographically to larger cities, the more likely they are to experience borrowed size effects. Second, hierarchical proximity—being closer in status within the urban system—can also lead to borrowed size benefits, regardless of their size. These effects can be achieved through contagious and hierarchical diffusion, respectively. Focusing on Korea's strongly hierarchical urban system, the study analyses 152 small‐ and medium‐sized cities using 8 indices and regression models. The results reveal that both geographic closeness to the primate city and a higher hierarchical position in the national urban system are key drivers of borrowed size. This study contributes to the discussion on agglomeration economies and network effects in urban economic development.