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. 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. Additionally, recent research has sought to explain the polycentricity described in Joel Garreau’william alonso location and land use pdf Edge City. 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.
Market forces in the development of cities relates to how the location decision of firms and households causes the development of cities. The nature and behavior of markets depends somewhat on their locations therefore market performance partly depends on geography. If a firm locates in a geographically isolated region, their market performance will be different than a firm located in a concentrated region. The location decisions of both firms and households create cities that differ in size and economic structure.
When industries cluster, like in the Silicon Valley in California, they create urban areas with dominant firms and distinct economies. Looking at land use within metropolitan areas, the urban economist seeks to analyze the spatial organization of activities within cities.
In attempts to explain observed patterns of land use, the urban economist examines the intra-city location choices of firms and households. Urban problems and public policy tie into urban economics as the theme relates urban problems, such as poverty or crime, to economics by seeking to answer questions with economic guidance. For example, does the tendency for the poor to live close to one another make them even poorer?
Urban transportation is a theme of urban economics because it affects land-use patterns as transportation affects the relative accessibility of different sites. Megaprojects such as this have been shown to be synonymous with unexpected costs and questionable benefits. Housing and public policy relate to urban economics as housing is a unique type of commodity.
Because housing is immobile, when a household chooses a dwelling, it is also choosing a location. In analyzing housing policies, we make use of market structures e.
There are however problems encountered in making this analysis such as funding, uncertainty, space, etc. Bent Flyvbjerg, 2013, “Mega Delusional: The Curse of the Megaproject”, New Scientist, December 2, pp.