Abstract
This chapter integrates the core model in neoclassical urban economics and the basic model. Genuine dynamic spatial economics is required to understand mechanisms and processes of location as time and space are the elementary variables for spatial location over time. Mainstreams of analytical economics omit space mainly because a genuine spatial analysis results in analytically intractable problems. Only a few research papers in theoretical economics analyze the role of physical capital in spatial growth properly. This chapter provides a rigorous spatial model to show how to integrate urban economics with growth theories. Rigorous spatial economic theory has focused on the role of space on location. Economic theories with endogenous physical capital neglect the role of space. Alonso residential distribution and Solow growth models are integrated within a single whole. The land value, residential structure, and growth interact over time and space. The chapter also comments on how to integrate new economic geography and neoclassical growth theory on basis of the models in Chaps. 4, 12, and 13.
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