International Handbook of Urban Policy, Volume 2
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International Handbook of Urban Policy, Volume 2

Issues in the Developed World

Edited by H. S. Geyer

This Handbook brings together a range of viewpoints on a number of the burning issues affecting urban sustainability in North America and Europe at the beginning of the 21st century. H.S. Geyer and his contributors cover a wide spectrum of the urban policy issues that determine the growth and development progress as well as the livability of cities in the Occident.
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Chapter 5: The New Economic Geography: A Simple Exposition

Issues in the Developed World

D. Urban


1 D. Urban 1. Introduction The focus of interest of regional and urban economics is the explanation of how economic activity is distributed in space. This issue becomes both academically interesting and important for economic policy exactly because economic activity is not distributed evenly in space. Cities form large agglomeration centres where economic activity is concentrated: there is a high population density, a concentration of shops and a concentration of firms. By contrast, the hinterland has lower population density, fewer shops and fewer firms per square mile. Moreover, there is also spatial specialization. Certain activities are concentrated in certain regions within a country. For example, cities have a larger concentration of service industries while rural areas are more specialized in agriculture. Finally, there are agglomeration phenomena at different levels of spatial aggregation. There are uneven spatial structures both within a city, separating downtown from residential areas or edge cities, and across regions, separating industrial cores from peripheries. There are also uneven spatial structures across countries. Strikingly, those spatial structures are often not related to geographical characteristics in an obvious way. For instance, many cities were founded at a river confluence, benefiting from inland water navigation. Many of these cities remained viable, however, even when road, rail and air transport replaced inland water navigation. Apparently agglomeration is to some extent self-reinforcing. Understanding the economic forces that form uneven self-reinforcing spatial structures has occupied regional and urban economists for a long time, ever since Marshall’s (1920) well-known discussion of agglomeration forces.2 Yet...

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