Urban Economics - Introduction

Introduction

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). Economics is the study of the allocation of scarce resources, and as all economic phenomena take place within a geographical space, urban economics focuses of the allocation of resources across space in relation to urban areas (Arnott & McMillen 2006:7) (McCann 2001:1). 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).

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). 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. (O'Sullivan 2003:13–14)