Monday, March 06, 2006

Urban economics

Until recently, cities existed to economize on transportation costs — hence their locations near industries or agriculture to reduce the expense of shipping products by sea or by train. Yet because transport (mainly trucking) costs dropped significantly during the 20th century, location has become irrelevant. In Glaeser's view, cities now exist so that people can have face-to-face interactions or be entertained or consume products and services. For businesses, cities are a place to benefit from a spillover in ideas and to reduce costs by being near other companies.

From this wonderful article on urban economics, focusing on one high profile practitioner of this art: Edward L. Glaeser of Harvard's John F. Kennedy School of Government. You can find his papers here.