Urban Growth with Housing and Spatial Structure

Abstract

As mentioned in the introduction, numerous contributions to urban economics have followed the equilibrium theory of urban land market pioneered by Alonso (1964). This approach has been extended in many directions. However, it is argued that one of limitations of urban land-use models is that most of the models concentrate on the residential location and urban structure and neglect production aspects of urban dynamics. On the other hand, urban growth theory is another important theoretical approach to explain spatial phenomena. There are many studies of urban growth and dynamics (e.g., Richardson, 1973, Smith, 1975, Rabenau, 1979, Henderson, 1985, Fujita, et al, 2000). The development of this approach has been influenced by neoclassical growth theory and theory of international trade. From the point of view of economic geography, one of limitations of the urban growth models is that they omit urban land use. We see that the urban economics studies economic geography with wages and capital accumulation fixed and the urban growth theory concentrates on growth factors such as capital accumulation, omitting spatial structures of urban systems. The purpose of this chapter is to develop the dynamic urban growth model to describe the growth of an isolated economic system with economic geography. We explicitly deal with three important and connected aspects of urban economics: growth of production and housing sectors, capital accumulation, and distribution of population over time and space within a compact framework.