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We use a simple theory of a system of cities to decomposethe determinants of the city size distribution into three main components: efficiency, amenities, and frictions. Higher efficiencyand better amenities lead to larger cities but also to greater frictionsthrough congestion and other negative effects of agglomeration.Using data on MSAs in the United States, we estimate these citycharacteristics. Eliminating variation in any of them leads to largepopulation reallocations, but modest welfare effects. We apply thesame methodology to Chinese cities and find welfare effects that aremany times larger than those in the US.