The Organization of Cities : Initiative, ordinary life, and the good life

This book focuses on the relationship between the state and economy in the development of cities. It reviews and reinterprets fundamental theoretical models that explain how the operation of markets in equilibrium shapes the scale and organization of the commercial city in a mixed market economy within a liberal state. These models link markets for the factors of production, markets for investment and fixed capital formation, markets for transportation, and markets for exports in equilibrium both within the urban economy and the rest of the world. In each case, the model explains the urban economy by revealing how assumptions about causes and structures lead to predictions about scale and organization outcomes. By simplifying and contrasting these models, this book proposes another interpretation: that governance and the urban economy are outcomes negotiated by political actors motivated by competing notions of commonwealth and the individual desire for wealth and power. The book grounds its analysis in economic history, explaining the rise of commercial cities and the emergence of the urban economy. It then turns to factors of production, export, and factor markets, introducing and parsing the Mills model, breaking it down into its component parts and creating a series of simpler models that can better explain the significance of each economic assumption. Simplified models are also presented for real estate and fixed capital investment markets, transportation, and land use planning. The book concludes with a discussion of linear programming and the Herbert- Stevens and the Ripper-Varaiya models. A fresh presentation of the theories behind urban economics, this book emphasizes the links between state and economy and challenges the reader to see its theories in a new light. As such, this book will be of interest to scholars, students, and practitioners of economics, public policy, public administration, urban policy, and city and urban planning. > Preface 6 Urban Economy as Intellectual Project 6 Methodology 11 Early Thinking About Cities: Faves 14 Johann Heinrich von Thünen (Born 1783) 17 Ernest (Ernst) George Ravenstein (Born 1834) 18 Alfred Marshall (Born 1842) 18 Charles Horton Cooley (Born 1864) 19 Adna Ferrin Weber (Born 1870) 20 Richard Melancthon Hurd (Born 1865) 20 Karl Emil Maximillian “Max” Weber (Born 1864) 21 Robert Ezra Park (Born 1864) et al. 21 Robert Murray Haig (Born 1887) 22 William John Reilly (Born 1899) 22 Walter Christaller (Born 1893) 23 Homer Hoyt (Born 1895) 23 Samuel Andrew Stouffer (Born 1900) 24 George Kingsley Zipf (Born 1902) 25 John Quincy Stewart (Born 1894) 25 Colin Grant Clark (Born 1905) 26 Torsten Hägerstrand (Born 1916) 26 Charles Mills Tiebout (Born 1924) 27 William Alonso (Born 1933) 27 Martin Beckmann (Born 1924) 28 Jay Wright Forrester (Born 1918) 28 Urban Geography 29 Urban Economics 35 Urban Sociology 38 Conclusions 43 Acknowledgements 45 Contents 46 List of Figures 52 List of Tables 54 Background Ideas 58 1 The State, Decentralization and Entitlement, and the Organization of Cities 59 Abstract 59 Economy 61 Market 64 State 67 Political Actors 70 Governance 72 Origin of the State 75 Decentralization and Entitlement 78 Urban Economy 83 Conclusion 86 2 State, Economy, and City: A Reconstruction 87 Abstract 87 Prehistory 88 Ancient World 91 The Roman World 103 Early Medieval Western Europe 109 The Rise of Commercial Cities 114 Conclusion 117 3 Explaining the Rise of Commercial Cities 119 Abstract 119 Self-actualization 122 Personal and Real Property 126 The Person-Land Premise and the Proletariat 128 Settlement and Spending Unit 130 State, Rights, Law, Property and Property Rights 132 Risk 136 Fear 138 Market 139 Hope 143 Urban Economy 144 The Mills Model 146 4 The Mills Model 147 Abstract 147 Assumptions 149 Model 150 Outcomes 156 Comparative Statics 159 An Increase in Demand for the Export Good (α) 161 An Increase in the Opportunity Cost of Land (Ra) 162 An Increase in the Wage Rate (W) 164 Promise and Limitations 165 Organization 166 Substitution 167 Fear and Risk 167 Urban Economy and the State 168 Initiative, Ordinary Life, and Good Life 169 Conclusions 169 Postscript: Solving the Model 170 Export and Factor Markets 175 5 A Simple Model of a One-Industry Town 176 Abstract 176 Assumptions 181 Model 182 Outcomes 185 Comparative Statics 186 Multimarket (Walrasian) Equilibrium 187 Organization 187 Substitution 188 Comparison with Mills Model 188 Urban Economy and Global Economy 189 Urban Economy and the State 190 Conclusions 190 6 Land for Worker Accommodation in a One-Industry Ribbon Town 192 Abstract 192 Assumptions 194 Model 195 Outcomes 200 Comparative Statics 206 Multimarket (Walrasian) Equilibrium 208 Organization 208 Substitution 210 Comparison to Mills Model 210 Land Rent 210 Urban Economy and the State 213 Why Do Workers Occupy Land? 214 Decentralization as Gathering Up 215 Conclusions 215 7 Land for Industry in a One-Industry Ribbon Town 217 Abstract 217 Assumptions 219 Model 219 Outcomes Assuming Case h 222 Outcomes Assuming Case Z 224 Comparative Statics 226 Multimarket (Walrasian) Equilibrium 227 Organization 228 Substitution 234 Comparison to Mills Model 234 Conclusions 235 8 A Simple Model of an Urban Economy with Multiple Industries 236 Abstract 236 Assumptions 238 Model 240 Outcomes 243 Comparative Statics 247 Comparison to Mills Model 247 Conclusions 248 9 Land for Worker Accommodation in a Multi-industry Ribbon Town 250 Abstract 250 Assumptions 251 Model 251 Outcome: All Industries Centralized 255 Outcome: One or More Industries Decentralized 259 Outcomes: With or Without Decentralization 262 Comparative Statics 268 Comparison to Mills Model 269 Organization 269 Disequilibrium Outcomes 273 Conclusions 273 10 Land for Industry in a Multi-industry Ribbon Town 274 Abstract 274 Assumptions 275 Model 276 Outcomes: One Centralized Export Industry with Hybrid Compensation, No Decentralized Industry 276 Outcomes: Multiple Centralized Export Industries 285 Outcomes: Adding a Decentralized Export Industry 285 Outcomes: Adding Multiple Decentralized Export Industries 295 Comparative Statics 296 Substitution 298 Comparison with Mills Model 298 Urban Economy and Global Economy 299 Urban Economy and the State 299 Initiative, Ordinary Life, and Good Life 299 Conclusion 300 11 Substitution by Consumers in the Urban Economy 301 Abstract 301 Assumptions 303 Behavior 305 Incorporating Time Spent Commuting 313 Comparative Statics in the Alonso Model 315 An Alternative Formulation 317 Comparative Statics in the Alternative Formulation 319 Urban Economy and Global Economy 319 Comparison with Mills Model 321 Organization 321 Role of the State 321 Initiative, Ordinary Life, and Good Life 322 Conclusion 322 Real Estate and Fixed-capital Investment Markets 323 12 Real Estate and the Urban Economy 324 Abstract 324 Individual Investor in Real Estate 325 The Market for Real Estate Assets 328 The Stock of Real Estate 328 Two-Quadrant Model of Real Estate Market 330 Four-Quadrant Model of Real Estate Market 333 Comparative Statics 337 Urban Economy and Global Economy 338 Comparison with Mills Model 338 Organization 339 Role of the State 339 Role of the City 340 What Is Still Missing? 341 13 Risk, Investment, and the Urban Economy 342 Abstract 342 The Investment Problem 344 Investment by a Leontief Firm 346 Investment by a Cobb-Douglas Firm 353 Conclusions 357 Transportation, Land Use Planning, and the Urban Economy 360 14 Districting in the Urban Economy 361 Abstract 361 Hurd’s World 363 Hurd’s Approach 365 Hurd’s Static Perspective on the City 369 Hurd’s Static Perspective on Land Use 372 Hurd’s Dynamic Perspective 379 Is Hurd Relevant Today? 384 15 A Simple Model of Land Use Planning in the Urban Economy 386 Abstract 386 Private Nuisance, Private Planning, and the Municipal Land Use Plan 388 Urban Sprawl and the Municipal Land Use Plan 390 Perspectives on Municipal Land Use Planning 392 Background to the Schlager Model 394 Assumptions, Model, and Method of Solution 395 Outcomes 397 Shadow Prices 399 Comparison to Hurd 403 Schlager’s Treatment of Real Estate 403 Urban Economy and the State 404 Conclusions 404 16 Private Nuisance, Zoning, and the Urban Economy 405 Abstract 405 Koopmans–Beckmann Problem 406 Design Standards 408 Assumptions 408 Model Incorporating Complementary Standards 409 Model Incorporating Nuisance Standards 414 Urban Economy and the State 419 Conclusions 419 17 Transportation Planning and the Urban Economy 420 Abstract 420 Transportation Flows 421 Model and Assumptions 424 Outcomes 426 Lagrangeans 428 Urban Economy and the State 437 Conclusions 438 Synthesis 439 18 The Herbert-Stevens Model 440 Abstract 440 Land Use and Dwellings 441 Households 442 Aggregation to Zones (Areas), Household Groups, and Land Use Activities 443 Herbert-Stevens (Primal) Linear Program 444 Herbert-Stevens Linear Program: An Example 445 Shadow Prices and Dual 447 Heterogeneity of Households 452 Herbert-Stevens and Schlager 453 Urban Economy and the State 453 19 An Efficient Urban Economy: The Ripper-Varaiya Model 454 Abstract 454 Model and Assumptions 455 Numerical Example 461 An Inefficient Solution to the Numerical Example 463 An Efficient Solution to the Numerical Example 467 Efficient Solution to a Second Numerical Example (Xx1 = 225) 467 Varying the Export Demand for Good 1 (Xx1 from 1 to 225) 472 Implications of the Ripper-Varaiya Model 478 Urban Economy and the State 482 Comparison with the Mills Model 484 Initiative, Ordinary Life, and Good Life 484 20 Conclusions 485 Abstract 485 Glossary 493 References 518 Index 551 Front Matter....Pages i-lx Front Matter....Pages 1-1 The State, Decentralization and Entitlement, and the Organization of Cities....Pages 3-30 State, Economy, and City: A Reconstruction....Pages 31-62 Explaining the Rise of Commercial Cities....Pages 63-89 Front Matter....Pages 91-91 The Mills Model....Pages 93-120 Front Matter....Pages 121-121 A Simple Model of a One-Industry Town....Pages 123-138 Land for Worker Accommodation in a One-Industry Ribbon Town....Pages 139-163 Land for Industry in a One-Industry Ribbon Town....Pages 165-183 A Simple Model of an Urban Economy with Multiple Industries....Pages 185-198 Land for Worker Accommodation in a Multi-industry Ribbon Town....Pages 199-222 Land for Industry in a Multi-industry Ribbon Town....Pages 223-249 Substitution by Consumers in the Urban Economy....Pages 251-272 Front Matter....Pages 273-273 Real Estate and the Urban Economy....Pages 275-292 Risk, Investment, and the Urban Economy....Pages 293-310 Front Matter....Pages 311-311 Districting in the Urban Economy....Pages 313-337 A Simple Model of Land Use Planning in the Urban Economy....Pages 339-357 Private Nuisance, Zoning, and the Urban Economy....Pages 359-373 Transportation Planning and the Urban Economy....Pages 375-393 Front Matter....Pages 395-395 The Herbert-Stevens Model....Pages 397-410 An Efficient Urban Economy: The Ripper-Varaiya Model....Pages 411-441 Conclusions....Pages 443-450 Back Matter....Pages 451-537