1. Urban Economics Introductory Lecture

2. Model of a Rural Region n Inputs. Labor and land n Two goods. Wheat and cloth n Equal productivity n No scale economies in production. Constant Returns to Scale n Travel by foot.

3. Implications n Every household will produce is own wheat and cloth n Factory production would be more expensive than home production because of travel costs. n Population uniformly distributed. No cities

5. Percent of U.S. Population Living in Urban Areas

6. Why Cities? n Comparative advantage, trade and economies of scale in transportation n Economies of scale in production n Agglomeration Economies –Localization Economies –Urbanization Economies n Other reasons?

7. Urban Economics “Urban economics is the study of the location choices of firms and households and of the consequences of those decisions.” Adapted from O’Sullivan, p.2. Added text in red.

8. Census 2000 Urban Facts Pop Quiz n What is the fastest growing metropolitan statistical area? n What is the largest consolidated metropolitan statistical area? n What is the second largest consolidated metropolitan statistical area? n What is the ten biggest cities in the United States?