Cities, a very very brief introduction

Why should we care about cities?

The most overused figure (Nations 2009)…

In 2009 for the first time in history 2009 more than 50% of the population lived within cities

… but still true!

Source of:

• economic growth,

• innovation - technology - …,

• but also - pandemics (!)

Why should we care about cities?

• Strong links historically between (McCann and Acs 2011):
  • Globalisation
  • Urbanisation
  • Industrialisation

Why should we care about cities?

Urban analytics and city science

• Understand cities and how they change
• Use critically and effectively urban data
• Understand and master methodological tools
• Support urban policy making

Different terms

• Academics love inventing new terms
• Urban science, city science, urban analytics, urban geography, geographic data science, urban data science, complexity science, TheNextBigThing
• Have a look: Batty (2019)

Why do cities exist?

• An economist’s answer: to economise!
• Because of economies of scale and agglomeration economies

Scale economies

• AKA increasing returns to scale, or
• AKA economies of scale
• Business enterprises become more efficient at large scales of operation
• More output per unit of input than at smaller scales
• ➔ larger enterprises
• Within firms

Scale economies

Scale economies

Increasing returns to scale

Scale economies

Scale economies

Constant returns to scale:

Scale economies

Scale economies

Decreasing returns to scale

Scale economies

Scale economies

How do they affect space?

Agglomeration economies

• AKA external economies of scale
• External to the firm
• Very important for cities
• Two types:
  • Localisation economies AKA Marshallian externalities
  • Urbanisation economies AKA Jacobian externalities

Localization Economies

• Within a group of firms of the same industry
• Clustered together at the same place
• Why?
  • Information exchange
  • Labour mobility
  • Specialist services

Examples: Silicon Valley (micro-electronics), The City of London (finance), Detroit and Michigan (automobile), Seattle (aerospace), etc.

Localization Economies

Urbanization economies

• Firms across different sectors
• Clustered together at the same place (Jane Jacobs 1961)
• A city
• Why?
  • Support services to firms experiencing internal and localization economies
  • Clustering
  • Increased local factor prices
  • Economies of scale

Agglomeration economies

• Diversity vs. specialization
• Internal economies of scale (firm specific)
• Localization economies (industry specific)
• Urbanization economies (city specific)

The sources of agglomeration

1. Knowledge spillovers (Marshall 1890)

• Interactions between employees of different firms
• Proximity
• Tacit knowledge
• Mutual trading of information

The sources of agglomeration economies

2. Non-traded local inputs

• Efficient provision of specialist inputs
• Infrastructure

The sources of agglomeration economies

3. Local skilled labour pool

• Sufficient quantity of labour to respond to market changes
• Specialised labour / cost of training

The sources of agglomeration economies

• Processes of learning, sharing and matching (Duranton and Puga 2004)
• Clustering:
  • Interaction
  • Dynamic
  • ➔ reduces knowledge and information transaction cost
• Higher profitability for firms within the cluster than those outside the cluster

Agglomeration economies: pecuniary vs. technological

• Pecuniary ➔ input cost reduction
• make inputs cheaper in larger cities
• Technological ➔ raise productivity
• make inputs more productive in larger cities

Agglomeration economies: a citique

Bounded rationality (Simon 1955, 1966)

• Information about space and location in limited
• Relocation issues, the ability of a rational decision is limited
• Relocation cost

Why cities do exist?

To economise!

In other words, collocation of people and firms increases efficiency.

Cities as complex system: scale

Urban models: looking into cities

The Burgess model

Source: bbc.co.uk

Urban models: looking into cities

The Burgess model

• Created by E.W. Burgess in 1925
• Developed in rings, reflecting waves of immigrants
• Used Chicago as his model
• Most European cities developed this way (pre-automobile)

Urban models: looking into cities

The Von Thünen model (The isolated state in 1826)

• Basic idea: Agricultural land uses follow predictable patterns around cities, which are the markets for the farm goods
• Goods with greatest demand and having the highest transport costs should be produced closest to the city

Urban models: looking into cities

Source: Coe, Kelly, and Yeung (2019)

Urban models: systems of cities

Why aren’t we all clustered in a huge city?

Urban models: systems of cities

Central place theory

Source: Wood and Roberts (2012) adapted from Christaller (1966)

Urban models: systems of cities

Central place theory

• Spatial distribution of cities and towns in Southern Germany
• Inductive instead of deductive
• Hierarchy of 3 different goods (3, 2, 1), 3 different market areas and 3 different levels of urban centres
• Assumptions: homogeneous land and equal
• Transport possibilities in all directions

Urban models: systems of cities

The core-periphery model

Source: Krugman and Elizondo (1996)

Summary

• Urban structure is not random
• Multiple scales: individual, neighbourhoods, cities, urban networks
• Cities are complex adaptive systems