Spatial inequality and urban costs: Revisiting the home market effect

This paper investigates how the interactions between product differentiation, transport costs, and urban costs determine the spatial inequality in a general‐equilibrium model. We shed light on the interrelation between different definitions of home market effect (HME) in literature. While the wages in the large region are always higher, the HME in industrial distribution occurs in a limited range of parameters, implying that the HME in factor price is more pervasive. Moreover, we show that the reverse HME is the more common outcome. It indicates that neglecting urban costs in theoretical methodologies tends to overestimate the existence of HME. We also disclose how a change in urban costs or transport costs affects regional inequalities and welfare.     

OPENNESS TO TRADE AND INDUSTRY COST DISPERSION: EVIDENCE FROM A PANEL OF ITALIAN FIRMS*

ABSTRACT We use Italian firm‐level data to investigate the impact of trade openness on the distribution of firms across marginal cost levels. In so doing, we implement a procedure that allows us to control not only for the standard transmission bias identified in firm‐level TFP regressions but also for the omitted price bias due to imperfect competition. We find that more open industries are characterized by a smaller dispersion of costs across active firms. Moreover, in those industries the average cost is also smaller.     

Cost Efficiency,Urban Patterns and Population Density When Providing Public Infrastructure: A Stochastic Frontier Approach

Relying on stochastic frontier analysis we propose a methodology to study the technological characteristics and cost efficiency levels related to the provision of public infrastructure for basic utilities. The methodology assumes a cost minimizing behaviour on the part of public officials when planning the construction of local infrastructure, which is represented by way of a flexible translog cost function. Introducing relevant definitions of scale economies, associated with larger numbers of inhabitants and dwellings, as well as economies of density, brought about by reductions in urban dispersion, we analytically determine the optimal population densities for which average cost is minimized. We illustrate our model with the water cycle sector, including water distribution, sewage collection and cleansing of wastewater, and considering data at the municipality level for the Spanish region of Castilla y León. The obtained results indicate potential cost savings in the form of decreasing average costs, as relevant scale and density economies are present, along with large inefficiency levels. Relevant policy guidelines favouring larger and denser urban sizes are drawn, as the observed cost excess is the result of a general suboptimal urban size in terms of population density, and the negative effects of dispersed settlement patterns.     

Labor Specialization, Transport Costs, and City Size

This paper proposes a simple model of pre-industrial urbanization. Agglomeration stems from increasing returns generated by the specialization of labor, whereas dispersion is provoked by the transport costs of the agricultural good. Considering the existence of some urban institutions (in particular guilds), the equilibrium size of cities is derived and it is efficient. Within this framework, the effects of urban domination (e.g., taxation of agriculture) and the emergence of primate cities are explored. Finally, the transition between early and modern urbanization is studied.     

Information Technology Impacts on Urban Spatial Structure in the Chicago Region

This paper examines the impact of information technology on urban spatial structure in the Chicago region. Urban scientists are challenged to understand in what ways information technology has influenced the distribution of urban economic activities: concentration or dispersion. Using data collected in the Chicago region, orientation of establishments toward the center is tested to separate the impact of locational features of centers from the impact of information technology. The result reveals that information technology has attraction as well as spillover effect on urban spatial structure and thus concentration rather than dispersion is dominant at a local scale in the Chicago region. It was found, however, that center‐orientedness varies depending on the sector.     

FIRM HETEROGENEITY,MULTIPLANT CHOICE,AND AGGLOMERATION

We examine the organization and location choice of heterogeneous firms in a two‐region economy. When some high‐productivity firms engage in multiplant production, a reduction in transport costs causes two changes in a small region: the closure of plants by high‐productivity multiplant firms and the relocation of low‐productivity single‐plant firms to the region. In the presence of high‐productivity multiplant firms, therefore, a decline in transport costs reinforces the spatial sorting of firms by productivity, enlarging the productivity gap between large and small regions. Conversely, reducing investment costs weakens the spatial sorting effects on regional productivity disparities.     

高速铁路对中国城市产业结构的影响研究

交通是影响城市产业发展的重要因素,高铁作为一种新型交通工具必将对城市产业发展产生影响。修正市场潜力模型分析高铁对中国城市产业结构的影响。结果表明：①总体上,高铁提升了城市服务业的比重,降低了城市制造业的比重;制造业型城市和服务业型城市的服务业比重都得到提升,制造业比重都下降;从单个城市来看,高铁提升了大多数制造业型城市和大多数服务业型城市服务业的比重。②对于制造业型城市的产业结构升级,高铁主要促进该类城市一般服务业比重的提升;对于服务业型城市的产业结构强化,高铁主要促进这些城市高端服务业比重的提升。③高铁的开通增强了中心城市的溢出效应,促进了中心城市及其周边城市的产业结构升级。     

Urbanization patterns: European versus less developed countries

This paper develops a model in which the interaction between transport costs, increasing returns to scale, and labor migration across sectors and regions creates a tendency for urban agglomeration. Demand from rural areas favors urban dispersion. European urbanization took place mainly in the 19th century, with higher costs of spatial interaction, weaker economies of scale, and a less-elastic supply of labor to the urban sector than in less developed countries (LDCs) today. These factors could help explain why primate cities dominate in LDCs, whereas a comparatively small share of urban population lives in Europe's largest cities.     

LOCATIONAL FACTORS IN THE DECLINING INDUSTRIAL COMPETITIVE ADVANTAGE OF THE NEW YORK URBAN REGION*

This paper investigates the locational factors that contributed to the decline of the New York urban region's industries during 1972-1975. Based on the static concept of a specialization index, a dynamic comparative advantage index is constructed. A model is then formulated to test the hypothesis that regional competitive advantage (vis-à-vis the nation) is a function of relative disparities in the change of these locational factors. Regression results show that the region's competitive advantage is influenced positively by the differential rate of change in market size, by the differential profit rate before tax, and negatively by the differential rate of change in unit labor cost and in unit energy cost. The differential tax rate does not seem to affect the region's competitive advantage. Nevertheless, a progressive corporate income tax structure tends to neutralize the beneficial effects of the economies of agglomeration and the urban attraction of the region.     

Determinants of Rent from Agricultural Land Around Metropolitan Areas

Three urban determinants of rent from agricultural land around metropolitan areas are incorporated into one rent model. The urban market factor and the transport cost as expressed in the Thünian crop rent equation are discussed in terms of their relevance to metropolitan areas. Then the effects on rent of the urban land market and urban economic change and their relationships with the market factor are examined. Graphic and mathematical expressions of a multideterminant model based on the combined crop system are developed, followed by a discussion on several variations of the model.     

“Power to the people”: Contesting urban poverty and power inequities through open GIS

Geospatial technologies are central to spatial decision making and governance, but gaining equitable access to these is still difficult for traditionally marginalized communities. We contend that the dominance of proprietary GIS software has contributed to this digital divide, as these are inherently disempowering to marginalized social groups. Their high purchasing cost and licensing fees pose access barriers to resource‐poor citizens. Design of proprietary software may also not be appropriate for marginalized groups who are neither trained in GIS, nor represent the needs of dominant market base. Therefore, “free and open source software for geospatial” (FOSS4G) and open GIS provide new opportunities in democratizing GIS, as these are open code and free of purchasing and licensing costs. This paper aims to discuss the role of open GIS in advancing the goals of public participation GIS (PPGIS). We first discuss the origins of the FOSS movement, and explore the ways it has shaped the FOSS4G and open GIS movements. Next, we examine how a community information system built with open GIS software is being successfully utilized by an environmental organization in Milwaukee, to contest urban poverty. Our research demonstrates that open source GIS offers unique opportunities in advancing PPGIS research and practice.     

Alonso and the Scaling of Urban Profiles

How urban characteristics change with total population, their scaling behavior, has become an important research field since one needs to better understand the challenges of urban densification. Yet urban scaling research is largely disconnected from intra-urban structure, and this seriously limits its operationalization. In contrast, the monocentric model of Alonso provides a residential choice-based theory to urban density profiles. However, dedicated comparative static analyses do not completely solve how the model scales with population. This article bridges this gap by simultaneously introducing power laws for land, income and transport cost in the Alonso model. We show that the equilibrium urban structure of this augmented model matches recent empirical findings about the scaling of European population density profiles and satisfactorily represents European cities. This result is however not compatible with the observed scaling power of housing land profiles, and challenges current empirical understanding of wage and transport cost elasticities with population. Our results call for revisiting theories about land development and housing processes as well as the empirics of agglomeration benefits and transport costs.     

What about effective access to cars in motorised households?

Most Canadian urban centres are facing difficulties with public transport systems. As car ownership has increased, urban areas have experienced a long‐term decrease in per capita ridership. At present, a significant proportion of riders in most cities is considered to be transit captives, which usually refers to carless individuals or members of carless households. But, what about members of motorised households without effective or real access to a car as, for instance, two‐income households with only one car? Do these ‘restricted car users’ constitute a significant, but somewhat hidden, segment of the transit market? The initial purpose of this paper was to learn more about individuals with restricted or no‐car access who live in car‐owning households: Who are they? Where do they live? Do their numbers fluctuate significantly throughout the day? More specifically, how has car access in motorised households changed in the past two decades? Sociospatial profiles of motorised household members with restricted car access are presented for 1981 and 1996. The second purpose was to analyse restricted car access in motorised households by using a multivariate model of car access for motorised households in the Québec metropolitan area. To achieve these objectives, we developed a logical typology of forms of ‘restricted car access’ based on a combination of variables, or resources, qualifying the degree of car access enjoyed by individuals at any given moment during the day: availability of a car, possession of a driver's licence and a driver at the disposal of other household members. This typology was then applied to the 1981 and 1996 origin–destination survey data obtained from the Québec Census Metropolitan Area.     

Manufacturing (co)agglomeration in a transition country: Evidence from Russia

We document the geographic concentration patterns of Russian manufacturing using detailed microgeographic data. About 80% of three-digit industries are significantly agglomerated, and a similar share of three-digit industry pairs is significantly coagglomerated. Industry pairs with stronger buyer–supplier links—as measured using Russian input–output tables—tend to be slightly more coagglomerated. This result is robust to instrumental variable estimation using either Canadian or US instruments. Using Canadian ad valorem transport costs as a proxy for transport costs in Russia, we further find that industries with higher transport costs are more dispersed, and industry pairs with higher transport costs are less coagglomerated.     

Product Differentiation and Location Choice in a Circular City*

Abstract. The paper analyzes spatial competition among firms that sell substitute and/or complementary products. The firms first choose locations on the perimeter of a circular city and then compete in quantities (à la Cournot). Both linear and convex (quadratic) transport costs are considered. In general, multiple location equilibria are encountered. Complete agglomeration, partial agglomeration, and complete dispersion are possible. Convex (quadratic) transport cost substantially shrinks the set of equilibria obtained under linear transport cost. In general, the results obtained for a larger number of firms selling complementary products are strikingly different from those obtained under a duopoly.     

Optimizing the Spatial Structure of the Agricultural Production Function

Important characteristics of spatial agricultural production functions are derived by introducing a non‐negative curvilinear spatial demand function for production input intensities. Given the usual neoclassical rationale assumptions of spatial demand for capital and labor inputs under competitive environment of farming in developing agricultural economies, the optimal production levels are determined by optimizing spatial demand for production inputs. Decreasing price‐to‐transport costs ratio (that is, decrease in the prices of capital goods or increase in freight rates) and increasing wage‐to‐travel costs ratio (that is, increase in labor wages or decrease in the travel rate) expand the limits of the (spatial) optimal boundary of the demand for agricultural capital goods and labor input respectively. These effects occur on account of the operation of (positive) spatial price gradient and (negative) wage‐gradient in the market region. It may be noted that elasticities of demand for production factors are spatially variant and have significant effects on the alterations in the structure of agricultural production. However, the spatial optimal solution of production has a complicated relationship with them. The price elasticity has negative and wage elasticity has positive spatial gradients in the market region. Farmers located in the periphery of the market region are not much affected by the proportionate changes occurring in the prices of agricultural capital goods but are more sensitive to the proportional changes in labor wages. Because of a decreasing trend in capital input demand and increase in labor input with distance from the market, capital‐product diminishes with a decreasing rate and labor‐product increases with an increasing rate in the spatial structure of agricultural production. As a result, capital‐labor ratio falls toward zero, which raises profit rate per unit of capital investment especially in the outer part of the market region. The equilibria of optimal production with price elasticity as well as of capital intensity with labor employment (that is, capital‐labor ratio as unity) determine spatial limits of the optimal production zone which is shifted outward subject to the provision of cheap transportation, stabilizing market prices and/or increasing wage rate at the market center. It will help in extending outwardly the optimal spatial limits of capital investment and will mobilize capital resources of farmers in the periphery for efficient and competitive capital‐dominated farming.     

FRAGMENTATION AND CLUSTERING IN VERTICALLY LINKED INDUSTRIES*

ABSTRACT This paper models the location of two vertically related firms in a low labor cost country and in a country with a large market. The upstream industry is more labor intensive than the downstream industry. We find that spatial fragmentation occurs for low values of the input‐output coefficient and intermediate values of the transport rate, particularly if the countries are very asymmetric in size. Otherwise, we obtain agglomeration either in the low cost country (when the transport rate is low) or in the large market (when the transport rate is high). Multiple agglomerated equilibria arise when the transport cost of the intermediate good is significant.     

Transport costs: measures, determinants, and regional policy implications for France

We develop a methodology to accurately compute transport costs.Based on the real transport network, our measure encompassesthe characteristics of infrastructure, vehicle and energy used,as well as labor, insurance, tax and general charges borne bytransport carriers. Computed for the 341 French employment areas,road transport shipments and the period 1978–1998, thisnew measure is compared to alternative ones such as great circledistance, real distance, or real time. We conclude that theseproxies do a very good job in capturing transport costs in cross-sectionanalysis. However, important discrepancies limit the possibilityof using them in time series analysis. Moreover, our measureallows us to identify the policies that most impact transportcosts. We show that transport technology and market structureare responsible for most of the transport cost decrease. Infrastructureimprovements only condition the spatial distribution of thegains. Finally, some implications for researchers and regionalpolicy makers are derived.     

Neoliberalism and Suburban Employment: Western Sydney in the 1990s

During the past 15 years metropolitan planning strategies of the NSW state government have done little to address the spatial distribution of either employment or labour market equity within the metropolis. In the fast‐growing outer western suburbs, the government has focused on attracting business investment to increase the stock of local jobs and to improve employment ‘self‐sufficiency’— a dominantly neoliberal policy framework. This paper explores a widening gulf between the reality of outer urban change and this policy framework by considering changes in the location of jobs and in the employment experiences of residents in Greater Western Sydney (GWS). Evidence is drawn from census journey‐to‐work data (1991–2001). While holding a majority of manufacturing jobs in Sydney, GWS also experienced continued growth of jobs in service industries during the 1990s. Yet the relative importance of employment in the city's fast‐growth finance and business services sector still lags well behind that of inner and northern parts of the city. The focus on growing the regional stock of jobs has not addressed problems of labour market access faced by residents of particular localities and the goal of employment self‐sufficiency has not delivered greater equity to outer suburban labour markets. A focus on sufficiency of access to employment for residents of GWS draws attention not only to regional stocks of jobs but also to the provision of social infrastructure and state‐provided services to outer suburban populations as they continue to expand.     

SHIPPING COSTS,INFORMATION COSTS,AND THE SOURCES OF INDUSTRIAL COAGGLOMERATION*

ABSTRACT Direct trade between establishments, coupled with costs of trading goods and information across space, has long been considered a primary determinant of industrial colocation. However, researchers have had difficulty decomposing the effects of interindustry trade into these two cost components. Using new techniques for separately estimating shipping and information costs, this paper provides an empirical framework for identifying the various sources of industrial coagglomeration among U.S. manufacturing industries. My findings suggest that both interindustry shipping costs and information costs influence metropolitan‐level coagglomeration. Additional evidence points to the significant role of direct information costs in determining intraindustry agglomerations.