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The authors show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urban, regional, and international economics. Since 1990 there has been a renaissance of theoretical and empirical work on the spatial aspects of the economy—that is, where economic activity occurs and why. Using new tools—in particular, modeling techniques developed to analyze industrial organization, international trade, and economic growth—this "new economic geography" has emerged as one of the most exciting areas of contemporary economics. The authors show how seemingly disparate models reflect a few basic themes, and in so doing they develop a common "grammar" for discussing a variety of issues. They show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urban, regional, and international economics. This book is the first to provide a sound and unified explanation of the existence of large economic agglomerations at various spatial scales.

Contents 4.5 Competition and the Spatial Organization of Markets 4.6 Concluding Remarks 5. Cities and the Public Sector 5.1 Introduction 5.2 The City as a Public Good 5.3 The Number and Size of Cities under Politics 5.4 Concluding Remarks Appendix PART II. THE STRUCTURE OF METROPOLITAN AREAS 6. The Spatial Structure of Cities under Communications Externalities 6.1 Introduction 6.2 Agglomeration as Spatial Interaction among Individuals or Firms 6.3 The City as Spatial Interdependence between Firms and Workers 6.4 The Monocentric City 6.5 The Polycentric City 6.6 Suburbanization and the Location of Multiunit Firms 6.7 Concluding Remarks Appendix 7. The Formation of Urban Centers under Imperfect Competition 7.1 Introduction 7.2 Monopolistic Competition and the Formation of Shopping Districts 7.3 Oligopolistic Competition and the Agglomeration of Retailers 7.4 Consumers' Search and the Clustering of Shops 7.5 The Formation of Urban Employment Centers

This book examines the economic reasons why people choose to live where they live and develops, through analysis of the bid rent function, a unified theory of urban land use and city size. The first part of the book explicates the basic theory of urban land use and optimal city size. Residential location behavior of households is examined in a microeconomic framework and equilibrium and optimal patterns of residential land use are discussed. The corresponding equilibrium and optimal city sizes are studied in a variety of contexts. Part Two extends the classical theories of von Thunen and Alonso with the addition of externality factors such as local public goods, crowding and congestion, and racial prejudice. The rigorous mathematical approach and theoretical treatment of the material make Urban Economic Theory of interest to researchers in urban economics, location theory, urban geography, and urban planning.

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