13. Neighborhood Quality and
Sorting
1
Introduction
In the Monocentric city model, transportation cost to
downtown determines the value of a property.
Why is Kerrisdale much more expensive than Downtown
Eastside?
Other factors: school quality, crime, n
Monocentric City Model
With Flexible Technology and
Preference
Monocentric City Model with Fixed
Proportion Technology and
Preference
Equilibrium rent curve
Residential
Area
CB
D
Agricultural
Area
Monocentric City Model
With Fixed Proportion Technology an
4. City Size
City Size
Vancouver2.3million.Toobigortoosmall,orjust
rightsize?
Optimalcitysize:thecitysizethatmaximizesthe
utility(orhappiness)ofitscitizen.
Citysizeisdeterminedbyindividualmigration
decision.
Doesthisleadtooptimalcitysize?
Simple Model
Agg
Monocentric City Model
with Geographic Constraints
Sanghoon Lee and Seungdong You.
1/18
Monocentric City
with Geographic Constraints
WhydoVancouverhavehighlandprice,comparedto
othercities?
BesidetheRobackmodelexplanation(i.e.,high
amenity),thefollowingare
Consider a Monocentric city in which the unit cost of commuting is
$10 per kilometer per month. A household located 8 kilometers from
the city center occupies a dwelling with 1,200 square feet at a
monthly rent of $600. Each developer builds 4 units of 1
Numerical Example
Thepriceofabushelofwheatatthemarketis$2.
Eachfarmproduces10,000bushelsperyear.
Nonlandproductioncost:$16,000
Eachfarmoccupies2acresofland.
Thecostoftransportingabushelis$0.05perkilometre.
Derivethebidrentfunction.
l
l
Plotthebidrentfunct
COMM 306 FINAL EXAM SPRING 2013
ANSWER KEY
April 22, 2013
Part I.
a.
The input demand of an individual rm is not large enough to exploit the scale economies in the
production of the intermediate input.
Transportation costs are relatively high.
b. localiza
COMM 306 FINAL EXAM
SPRING 2011
Student Name and ID Number:
Part I. (20 points) each question is worth 5 points.
1. State the definition of spatial equilibrium.
2. Explain Census agglomeration.
3. Explain Coase theorem.
4. Suppose that developers' bid ren
Part II.
1.
2.
Suppose that all L types live in neighborhood 1 and all H types live in neighborhood 1.
( )
( )
Bid rent
Bid rent
Type H
Type L
Neighborhood 1
10*50-390=110
5*50-100=150
Neighborhood 2
10*90-390=510
5*90-100=350
Thus, equilibrium rent is 15
COMM 306 MIDTERM EXAM
SPRING 2013
Student Name and ID Number:
Part I. (20 points) each question is worth 5 points.
1. State the definition of spatial equilibrium.
2. Provide the definition of Census Metropolitan Area (CMA).
3. Mills (2000) found that doub
COMM 306 MIDTERM EXAM
SPRING 2012
Student Name and ID Number:
Part I. (20 points) each question is worth 5 points.
1. State the definition of spatial equilibrium.
2. State the definition of bid rent.
3. Small firm headquarters are usually located in downt
COMM 306 MIDTERM EXAM
SPRING 2012
Student Name and ID Number:
Part I. (20 points) each question is worth 5 points.
1. State the definition of spatial equilibrium.
An allocation where no one has an incentive to move to another location.
2. State the defini
Part I.
1. a) Canada
A Census Metropolitan Area (CMA) or a Census Agglomeration (CA) is formed by one or
more adjacent municipalities centred on a large urban area.
To be included in the CMA or CA, other adjacent municipalities must have a high degree
of
Answer key for 2013 Midterm Exam
March 5, 2013
1
Part I
1. An equilibrium allocation where no one has an incentive to move to another location.
2. A census metropolitan area (CMA) is formed by one or more adjacent municipalities centred on a large
urban a
Consider a Monocentric city in which the unit cost of commuting is
$10 per kilometer per month. A household located 8 kilometers from
the city center occupies a dwelling with 1,200 square feet at a
monthly rent of $600. Each developer builds 4 units of 1
Subcentres
1
Source: http:/
2
www.metrovancouver.org/planning/development/urbancentres
Central Place Theory
A spatial theory that attempts to explain
the reasons behind the distribution
patterns, size, and number of cities and
towns.
The same idea can be
Land Use Patterns and Rents
How are land uses and rents are determined in different
locations within a city?
Unlike Roback model we do not look at wage distribution within a city
because we assume identical workers and firms would not pay
different wages
A Demand and Supply Model of
Regional Growth and Development
This model shows how an economic
shock (on basic industry) affects interregional migration patterns and wages.
What happened to Calgary with rising or
falling oil price?
Its impact on Vancouv
4. City Size
City Size
Vancouver2.3million.Toobigortoosmall,orjust
rightsize?
Optimalcitysize:thecitysizethatmaximizesthe
utility(orhappiness)ofitscitizen.
Citysizeisdeterminedbyindividualmigration
decision.
Doesthisleadtooptimalcitysize?
Simple Model
Agg
Monocentric City Model
with Geographic Constraints
Sanghoon Lee and Seungdong You.
1/18
Monocentric City
with Geographic Constraints
Why do Vancouver have high land price, compared to
other cities?
Beside the Roback model explanation (i.e., high
amenity),
Neighborhood Quality and
Sorting
1
Introduction
In the Monocentric city model, transportation cost to
downtown determines the value of a property.
Why is Kerrisdale much more expensive than Downtown
Eastside?
Why does Kerrisdale have better amenities than
Monocentric City Model
With Flexible Technology and
Preference
Monocentric City Model with Fixed
Proportion Technology and
Preference
Equilibrium rent curve
Residential
Area
CB
D
Agricultural
Area
Monocentric City Model
With Fixed Proportion Technology an
Urban Wage Premium
Urban Wage Premium
Average wages tend to increase with city size.
Strong empirical regularity: urban wage
premium can be found in most countries.
Urban Wage Premium
Why dont workers all come to cities for higher wages?
Why dont fir
Why do Cities Exist?
What is a city? Economic and statistical
definitions
Why do cities Exist?
What determines city size? A Model
1
Economic Definition of a City
A spatial cluster of economic activity where land is used
intensively, i.e., a place where po
Monocentric City Model
with Fixed Proportion Technologies and Preference
1
Monocentric City
ResidentialArea
CBD
Agricultural
Area
2
Overview of the Model
Afeaturelessplanewithapredeterminedcentre(e.g.,rail
stationorport).
Exportfirms
l
l
l
l
Households
l