Regional Economics George Horváth Department of Environmental Economics

Phases of urban growth 1 SuburbanisationUrbanisationDisurbanisationReurbanisation Central town Agglomerative ring Total urbanised area

Urban networks and their hierarchies The theory of central locations os one of the most important theories of regional economics Its development is connected to the name of two people: –August Lösch (1942): The Spatial Order of Economics –Walter Christaller (1933): Central Locations in Southern Germany 2

Christaller’s model Each product has its own maximal market area and maximal price, which – ceteris paribus – will depend on the production and transport costs If transport costs are relatively large compared to production costs, and consumers are less willing to pay a higher price, the market area will be relatively small If transport costs are relatively small and/or consumers are willing to pay a higher transport cost, the market area will be bigger. This all depends on the properties and the demand of the product 3

A hexagonal system 4

System of Centres The rank of a city is not determined by its population or territory Instead, it is determined by how many different kinds of trading and services functions they fulfil, and what market area it serves This is the so-called „importance-sufficit” If the same basket of goods and services are consumed frequently by a larger number of people, there needs to be a denser network expanding to many localities If fewer people consume less frequently, a smaller network will do, which will be restricted to greater centres only. 5

System of Centres – in numbers m= category number of settlement P m = the population served by a centre of the m th order C m = the population of a centre of the m th order K= the part of population of the area living in the Centre S= the number of lower order areas pertaining to a larger area If k = 0,5 and s = 3, then: 6 CategoryPop. of CentrePop. of AreaNo. of Centres

System of Centres – graphically 7

Lösch’s approach to the markets Each product and service has a market area of a different size This would trigger us to create countless market areas and centres, which is obviously irrational. If we align networks of markets to the Primary Centre, and then we rotate these around the Centre, such that as many networks and centres should coincide… … experience will tell us that this will result in 12 sectors, 6 sectors will have a much larger number of centres than the other 6 8

Lösch’s market networks – graphically 9

Multiplicators and Tinbergen’s Model The theories of Christaller, Lösch and Keynes may be connected in Tinbergen’s Model In this model, the network of settlements is such a system, whose ultimate goal is the provision of food- producing village dwellers with products and services In developed countries, this is done by Centres on different levels and providing particular goods and services 10

Jan Tinbergen’s Model Let’s take k as the number of Centres on the various levels Each centre on any level produces the goods and services assigned to them… …but each centre is also capable of producing the goods and services on inferior levels. Y is the national product of the country L 0, L 1, L 2, … L n are the ratios of the products and services belonging to each functional category in the national product of the country 11

An example of Jan Tinbergen’s Model Let’s take the population of a region to be people –55% of all income is spent on agricultural products, –20% is spent on low-level services –15% is spent in medium-level services –10% is spent on high-level services According to Tinbergen’s Model, people live in villages, in low-level centres, in medium level centes, and live in high-level centres Let’s suppose there is a change in demand: –40% will be spent on agricultural products –25% on low-level services –20% on medium-level services –15% on high level services 12

Effect of sectorial change on spatial location 13 Settlement type Original population Population after change Change in % Village Low-level centre Medium-level centre High-level centre Total region

Rank-size models Rank-size models are an alternative approach to urban networks, essentially yielding the same structure This distribution holds for –Distribution of wealth among people, –Avalanches, –Forest fires, –Floods, –Distribution of frequency and magnitude of wars, –Structure of urban network 14