The dominance of capital cities (urban primacy) is an enduring characteristic of Australian states. There has been limited empirical research examining the drivers of primacy in states despite some being extreme examples of the phenomenon, both in magnitude and scale. In light of institutional theories of settlement patterns, we developed a profile of Australian urbanization using a century of time-series data, descriptive statistics, and an empirical model of city populations. In Australian states high measures of primacy have endured with little evidence of disruption despite the enormous size of these states, their wealth, and population growth – factors associated with declining and low primacy. Statistically, state capital city status has a significant effect on city population size variation, with results suggesting primacy in states is in part a product of Australian federalism. This contrasts with views that suggest Australia’s scarcity of large non-capital cities is due to isolation, low population, and environmental determinism. The findings in this paper have major implications relative to national and/or state strategies that aim to decentralize population away from the primate cities.

By analyzing the population growth at the top of the urban hierarchy, we test two hypotheses explaining the rise of mega-cities: trade and political institutions. We find that democratic institutions are the main factor behind the concentration of a nation's urban population in the main city. Contrary to the literature, we find that extractive institutions reduce the size of the biggest city.