Urban Economics

Urban economics is broadly the economic study of urban areas. In the current environment of shifting economic trends and complex real estate transactions, the need for clear, concise and thoughtful analysis of real estate is greater than ever.

Urban economics excels at exceeding the challenging demands of developers, property owners, lenders and attorneys. As such it involves using the tools of economics to analyze urban issues such as crime, education, public transit, housing and local government finance. More narrowly it is a branch of microeconomics that studies urban spatial structure and the location of households and firms.

Much urban economic analysis relies on a particular model of urban spatial structure, the monocentric city model pioneered in the late 1960’s by William Alonso and 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 formulation, functioning and development of cities. Since its formulation in 1964, William Alonso’s monocentric model of a disc- shaped Central Business District and surrounding residential region has served as a starting point for urban economic analysis. Monocentricity model however has become weaker over time due to changes in technology, particular due to faster and cheaper transportation and communications.

Land use

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. Considering the spatial organization of activities within cities, urban economics addresses questions in terms of what price determination across space, the economic forces that caused the spread of employment from the central core of cities outward, identifying land- use controls, such as zoning and interpreting how such controls affect the urban economy.

Economic Policy

Economic policy is often implemented at the urban level thus economic policy is often tied to urban policy. Urban problems and public policy tie intro urban economies as the theme relates urban problems, such as poverty or crime to economics by seeking to answer questions with economic guidance.

Transportation and Economics

Urban transportation is a theme of urban economics because it affects land- use patterns as transportation affects the relative accessibility of different sites. Issues that tie urban transportation to urban economies include the deficit that most transit authorities have and efficiency questions about proposed transportation developments such as light- rail.

Questions:

• What is Urban Economics?
• How do transportation and economic policies affect urban economics?