![]() ![]() Looking at land use within metropolitan areas, the urban economist seeks to analyze the spatial organization of activities within cities. Because urban economics is concerned with asking questions about the nature and workings of the economy of a city, models and techniques developed within the field are primarily designed to analyze phenomena that are confined within the limits of a single city ( McCann 2001:2). When industries cluster, like in Silicon Valley in California, they create urban areas with dominant firms and distinct economies.īy looking at location decisions of firms and households, the urban economist is able to address why cities develop where they do, why some cities are large and others small, what causes economic growth and decline, and how local governments affect urban growth ( O'Sullivan 2003:14). The location decisions of both firms and households create cities that differ in size and economic structure. If a firm locates in a geographically isolated region, its market performance will be different than a firm located in a concentrated region. The nature and behavior of markets depend somewhat on their locations therefore market performance partly depends on geography.( McCann 2001:1). Market forces in the development of cities relate to how the location decision of firms and households causes the development of cities. Market forces in the development of cities Arthur O'Sullivan believes urban economics is divided into six related themes: market forces in the development of cities, land use within cities, urban transportation, urban problems and public policy, housing and public policy, and local government expenditures and taxes. Many spatial economic topics can be analyzed within either an urban or regional economics framework as some economic phenomena primarily affect localized urban areas while others are felt over much larger regional areas ( McCann 2001:3). Other branches of economics ignore the spatial aspects of decision making but urban economics focuses not only on the location decisions of firms but also of cities themselves as cities themselves represent centers of economic activity ( O'Sullivan 2003:1). Economics is the study of the allocation of scarce resources, and as all economic phenomena take place within a geographical space, urban economics focuses on the allocation of resources across space in relation to urban areas ( Arnott & McMillen 2006:7) ( McCann 2001:1). Urban economics is rooted in the location theories of von Thünen, Alonso, Christaller, and Lösch that began the process of spatial economic analysis ( Capello & Nijkamp 2004:3–4). ![]() ![]() 2 Market forces in the development of cities.Several explanations for polycentric expansion have been proposed and summarized in models that account for factors such as utility gains from lower average land rents and increasing (or constant) returns due to economies of agglomeration ( Strange 2008). ![]() Monocentricity has weakened over time because of changes in technology, particularly, faster and cheaper transportation (which makes it possible for commuters to live farther from their jobs in the CBD) and communications (which allow back-office operations to move out of the CBD).Īdditionally, recent research has sought to explain the polycentricity described in Joel Garreau's Edge City. Since its formulation in 1964, Alonso's monocentric city model of a disc-shaped Central Business District (CBD) and the surrounding residential region has served as a starting point for urban economic analysis. While most other forms of neoclassical economics do not account for spatial relationships between individuals and organizations, urban economics focuses on these spatial relationships to understand the economic motivations underlying the formation, functioning, and development of cities. Much urban economic analysis relies on a particular model of urban spatial structure, the monocentric city model pioneered in the 1960s by William Alonso, Richard Muth, and Edwin Mills. More specifically, it is a branch of microeconomics that studies urban spatial structure and the location of households and firms ( Quigley 2008). Urban economics is broadly the economic study of urban areas as such, it involves using the tools of economics to analyze urban issues such as crime, education, public transit, housing, and local government finance. ![]()
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