The Origins of Cities: Central Place Theory
The Initial Assumptions:
1.
Homogeneous
plain (resources the same everywhere)
2.
Initially
populated by self-sufficient households
3.
Transportation
costs are equal in all directions and proportional to distance
Under these three conditions, production will
concentrate at particular places due to economies of scale in production.
Determinants of economies of scale:
1. The role of the production function: changes in capital investment and long-run
average costs
2.
Demand density (population and income per
capita)
3.
The
role of innovation and the entrepreneur
Determinants of the extent of market areas of
individual firms
1.
Extent
of economies of scale (increase market to individual firm)
2.
Demand-density
(higher demand density increases frequency and lowers market area of individual
firms in a given area.)
3.
Transportation
costs (effect is ambiguous) Lower costs
increase demand density and support more firms with smaller market areas or allow
more distant customers to substitute lower production costs for transportation
cost of greater distance traveled)
The role of competition results in imperfect
competition or monopolistic competition solution with differentiation of the
same product based upon geographic location.
The hierarchy of central place activities results
from the sharing of common locations due to the following agglomeration
economies:
1.
Economies
of scope
2.
Localization
economies
3.
Urbanization
economies
Higher-ordered
cities perform economic functions for lower-ordered cities that are in their hinterland
for a particular activity.
The pattern of cities predicted by central place theory may not hold because of the failure to meet initial assumptions.
1.
Production
costs may vary not only because of economies of scale but also by natural
resource endowments (i.e. not a homogeneous plain)
2.
Transportation
costs are not equal in all directions
3.
Rural
markets (initially households) are not evenly distributed
4.
Non
economic factors (culture, politics, leadership) may be important but not
evenly distributed
5.
Competitive
practices may lead to freight absorption and phantom freight (other forms of
imperfect competition)
Limits to Urban Size
Historical constraints on
the size of a city:
1.
The
cost of transportation to export goods and import agricultural products.
2.
The
degree of economies of scale relative to market demand.
3.
The
cost of carrying on activities within the city itself (commuting to work,
delivery of water, disposal of waste and sewage)
The
history of urbanization follows the relaxation of these constraints.
Preindustrial
Cities
1.
Frame
buildings (before structural steel) led to low building density
2.
Hoof
and foot overland transportation or bulk transport by water
3.
Private
water wells, dirt streets, and gravity waste disposal (epidemic diseases were
prevalent—NY City death rate doubled from 1810 to 1859 with increase in
population density without clean water and waste disposal)
4.
Workers
lived within 3 miles of job centered along a navigable waterway
5.
Major
cities were commercial cities rather than industrial cities (limited by
transport cost to achieve demand density needed for economies of scale)
Industrial
Cities
1.
The
development of canals and railroads during the first half of the nineteenth
century enabled economies of scale to be achieved.
2.
Import
substitution further added to domestic production.
3.
Inner
city transportation advances with the horse-drawn omnibus and street car
doubled radius of city beyond walking distance (area increased four times)
4.
Cheap
smelting and electricity led to electric trolley and development of hub and
spoke form of cities. Subways developed
to relieve overland congestion.
5.
Structural
steel and elevators allowed for greater land use density. Housing became less expensive with balloon
construction (frames nailed together rather than fit through slots, etc.)
6.
The
decentralization of cities (new cities with less population density) was fueled
by the development of electric power rather than steam power in industry and by
the internal combustion engine.
7.
Automobiles
and trucks affect housing and firm locations, leading to a different form of
the city (multinuclear)
8.
Firms
separated their “packet of functions” (central office, production, and
warehousing) based upon the need for central city access and the availability
of land.
Post
Industrial Cities
1.
The
development of services rather than industry as an economic base.
2.
The
role of face to face contact for selective urban functions
3.
The
clustering effect of creating new innovations
4.
The
decentralization forces of information technologies
5.
The
problems of urban diseconomies of agglomeration as opposed to the advantages of
agglomeration and economies of scale.
Cities
in the “New Economy” http://www.rri.wvu.edu/WebBook/Norton/nortonupdate/creativity.htm
City
Rankings in 1994: http://www.mnsfld.edu/depts/lib/cities.html
Census
2000 rankings: http://www.dc.peachnet.edu/~snelson/1101/Projects/2000cityrank.html
Best
Places to Live: http://affiliate.timeincmags.com/money/depts/real_estate/bestplaces/sanfrancisco.html
Fattest
and Fittest:
http://www.click10.com/sh/health/stories/health-116776520020103-140150.html