Urban Economics and Land Use

Units

1. 1

   Why cities exist

   4 lessons

   1. Agglomeration economiesExplain why firms and workers are more productive in bigger cities through sharing, matching and learning, measure the gain with an elasticity, and tell urbanization from localization economies.
   2. Trade, transport and city locationExplain with transport cost lines why cities grow where goods change mode at ports, river mouths and rail nodes, and compute the saving from a break of bulk.
   3. Urban hierarchy and central place theoryUse threshold and range to explain why towns serve hexagonal market areas, and derive the pattern of one city, two towns, six villages and eighteen hamlets in a K = 3 central place system.
   4. The rank-size rule and city growthState and test the rank-size rule Pₖ = P₁ / k on a list of city sizes, read it as a straight line of slope −1 on a log-log chart, and explain Gibrat's law of proportional growth.
2. 2

   Bid-rent and the monocentric city

   4 lessons

   1. Ricardian and von Thunen land rentDerive rent as the advantage of a site over the marginal land (Ricardo), write von Thünen's rent R(x) = Q × (p − c − t x) falling with distance x from the market, and find where crops switch.
   2. Bid-rent curves and land useWrite a use's bid-rent curve as R(x) = R₀ − t x, find where the curves of retail, office and housing cross, and show that the highest curve at each distance wins the land.
   3. Household location choiceModel a household that trades commuting cost against land, solve its choice of land and goods at a given distance from the center, and show that at the chosen location the marginal commute cost equals the marginal land saving.
   4. Density gradients and land pricesUse the exponential density gradient D(x) = D₀ × e^(−g x), compute density at any distance and the distance over which it halves, and link a falling land price and falling building height to the same pattern.
3. 3

   Suburbanization and polycentric cities

   4 lessons

   1. Why cities decentralizedReviews cars, highways, income growth, falling commuting cost and the flight from city problems, with a timeline of population by ring and a bid-rent graph flattening as commute costs fall.
   2. Subcenters and polycentric citiesDescribes employment subcenters, edge cities and job decentralization, with a map of density peaks across a metro area and a chart of employment density against distance.
   3. Sprawl and its externalitiesDefines sprawl, leapfrog development and the externalities of open-space loss and infrastructure cost, with a map of leapfrog parcels and a marginal cost versus private cost graph.
   4. Spatial mismatch and job accessExplains the spatial mismatch hypothesis of worse job access for central residents, with a map of residential areas and job centers and a chart of commute time by group.
4. 4

   Housing markets and supply

   4 lessons

   1. Housing demand and affordabilityExamines income, household formation and prices, with the price-to-income ratio and rent burden of 30 percent of income, in a demand curve shifting out and a chart of affordability by metro.
   2. Housing supply and its elasticityComputes price elasticity of supply = percent change in quantity / percent change in price, and why land and rules make supply inelastic, with two supply curves comparing an elastic and an inelastic metro.
   3. Filtering and housing submarketsDescribes how homes age and move down the quality ladder, as new luxury building frees older units, in a chain-of-moves diagram and a chart of rents by housing age.
   4. Housing price dynamics and bubblesExplains how demand shocks lift prices in inelastic markets, user cost of housing and overshooting, with a chart of prices after a demand shock in two metros and a user cost table.
5. 5

   Zoning and land use regulation

   4 lessons

   1. Zoning basics and its legal basisIntroduces Euclidean zoning, use districts, height, setbacks and floor area ratio FAR = floor area / lot area, with a zoning map of districts and a diagram of a lot with setbacks.
   2. Zoning as externality controlExplains the nuisance rationale of separating uses and the cost of mismatched rules, with a map of industrial and residential parcels and a graph of social cost of mixed uses.
   3. Zoning's effect on housing pricesModels density limits shifting supply, with a supply and demand graph where a height cap raises prices, plus a table comparing rents and permits in strict and permissive metros.
   4. Zoning reform and alternativesContrasts form-based codes, inclusionary zoning, upzoning and transferable development rights, with a before-and-after zoning map of an upzoned corridor and a table of effects on supply.
6. 6

   Transportation and congestion

   4 lessons

   1. Commuting and mode choiceComputes generalized cost as money plus value of time, and mode choice among car, bus and rail, with a table of time and cost per mode and a chart of mode share against distance.
   2. Congestion as an externalityDraws average and marginal cost curves of travel, showing each driver ignores the delay imposed on others, with a graph of excess traffic over the efficient level and its welfare loss.
   3. Congestion pricing and road investmentSets the optimal toll = marginal external cost, and explains induced demand and why new lanes fill, with a toll graph and a chart of traffic before and after lanes are added.
   4. Transit and land useLinks rail stations, transit-oriented development and density, with a map of a station area with density bands and a graph of bid-rent rising near the station.
7. 7

   Local public finance and sorting

   4 lessons

   1. The Tiebout model and local governmentsExplains households voting with their feet among communities with different taxes and services, with a map of jurisdictions and a diagram of households sorting by preference.
   2. The property tax and capitalizationComputes tax = assessed value x mill rate, discusses incidence and capitalization of taxes and services into house values, with a table of tax bills and a graph of value responding to tax and school quality.
   3. Fiscal zoning and school financeShows how towns use zoning to exclude and keep tax base, and how school funding differs by wealth, with a map of towns by lot size and a chart of per-pupil spending against property wealth.
   4. Segregation and neighborhood effectsDescribes sorting by income and race, the dissimilarity index and neighborhood effects on outcomes, with a neighborhood map of group shares and a chart of the index over time.
8. 8

   Planning and growth management

   4 lessons

   1. The comprehensive planDescribes the general plan, its elements (land use, housing, circulation, open space) and how zoning must be consistent with it, using a hierarchy diagram from plan to zoning to permits and a plan map.
   2. Subdivision and infrastructureCovers platting, lot design, dedication of streets and utilities and the subdivision approval process, with a plat map of a subdivision and a flowchart from preliminary plat to final plat.
   3. Growth management toolsCompares urban growth boundaries, permit caps, adequate public facilities rules and impact fees, with a map of a boundary and a graph of land prices inside versus outside.
   4. Smart growth and planning casesEvaluates infill, mixed use and conservation planning in actual-style cases, scoring alternatives on cost, traffic and housing, in a scenario map and a comparison table.