urban economics

529 Pages·2012·8.17 MB·English

DiscoVEr WHaT maKEs o’sULLiVan’s URBAN ECONOMICS so PoPULar 8 8th edition
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Over the course of two decades, Urban Economics has achieved a worldwide d
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audience, and has been translated into Chinese, Greek, Russian, and Korean. Like the ti
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seven previous editions, this edition provides a clear and concise presentation of the n
economic forces that:
• cause the development of cities;
• determine the spatial form of cities; U
• cause urban economies to grow or shrink; r
• generate urban problems such as poverty, crime, and congestion; b
• make the market for urban housing unique; and a
• shape the tax and spending policies of local government. n
In addition to developing the basic concepts of urban economics, the book uses E
economic analysis to evaluate the merits of policies designed to address our most c
vexing urban problems. o
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• A new chapter on urban education explores the contributions of the key inputs to the
production process, including the home environment, peer groups, and teachers. i
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• A thoroughly revised chapter 11 on urban transit incorporates the most recent
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developments in theory, empirical results, and practice.
• New material in chapter 2 explores the connections between education, innovation,
and urban development. M
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• Chapter 1 introduces the axioms of urban economics, which provide a foundation O D
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for economic analysis throughout the book.
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• GIS-generated maps allow the visualization of the key features of the urban economy. M
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• End-of-Chapter Exercises give students the opportunity to test their mastery of the l #
material and extend the analysis. liv 116
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• A user-friendly Microeconomics Appendix gives students the opportunity to review n 48
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relevant economic concepts in a just-in-time fashion. 0
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For more information and resources visit the text’s website at www.mhhe.com/osullivan8e C
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Urban Economics G
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Arthur O’Sullivan
Urban Economics
EIGHTH EDITION
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Urban Economics
EIGHTH EDITION
Arthur O’Sullivan
Department of Economics
Lewis & Clark College
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URBAN ECONOMICS, EIGHTH EDITION
Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York,
NY, 10020. Copyright © 2 012 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions © 2009, 2007, and 2003.
Printed in the United States of America. No part of this publication may be reproduced or distributed in any form or by any means,
or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but
not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.
Some ancillaries, including electronic and print components, may not be available to customers outside the United States.
This book is printed on acid-free paper.
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ISBN 978-0-07-351147-4
MHID 0-07-351147-1
Publisher : Douglas Reiner
Sponsoring Editor : Daryl Brufl odt
Director of Marketing & Sales: Jennifer J. Lewis
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Buyer: Susan K. Culbertson
Design Coordinator : Margarite Reynolds
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Cover Designer: Mary-Presley Adams
Cover Image Credit: Imagezoo/Getty Images
Typeface: 10/12 Times Roman
Compositor: MPS Limited, a Macmillan Company
Printer: Quad/Graphics
Library of Congress Cataloging-in-Publication Data
O’Sullivan, Arthur.
Urban economics / Arthur O’Sullivan. — 8th ed.
p. cm.
Includes index.
ISBN 978-0-07-351147-4
1. Urban economics. I. Title.
HT321.O88 2012
330.9173'2—dc23
2011022545
www.mhhe.com
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To Professor Ed Whitelaw, the most talented teacher I’ve ever known.
It has been almost 30 years since I’ve been in Ed’s class, but whenever
I start thinking about how to teach some new material,
my fi rst thought is “How would Ed present this material?”
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About the Author
ARTHUR O’SULLIVAN is a professor of economics at Lewis and Clark College
in Portland, Oregon. After receiving his B.S. degree in economics at the University
of Oregon, he spent two years in the Peace Corps, working with city planners in the
Philippines. He received his Ph.D. degree in economics from Princeton University
in 1981 and taught at the University of California, Davis and Oregon State Univer-
sity, winning teaching awards at both schools. He is the Robert B. Pamplin Junior
Professor of Economics at Lewis and Clark College in Portland, Oregon, where he
teaches microeconomics and urban economics. He is the coauthor of the introduc-
tory textbook, Economics: Principles and Tools , currently in its seventh edition.
P rofessor O’Sullivan’s research explores economic issues concerning urban
land use, environmental protection, and public policy. His articles appear in many
economics journals, including Journal of Urban Economics, Regional Science and
Urban Economics, Journal of Environmental Economics and Management, National
Tax Journal, Journal of Public Economics , and Journal of Law and Economics .
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Preface
T
h is book is on urban economics, the discipline that lies at the intersection of
geography and economics. Urban economics explores the location decisions of util-
ity-maximizing households and profi t-maximizing fi rms, and it shows how these
decisions cause the formation of cities of different size and shape. Part I of the book
explains why cities exist and what causes them to grow or shrink. Part II examines
the market forces that shape cities and the role of government in determining land-
use patterns. Part III looks at the urban transportation system, exploring the pricing
and design of public transit systems and the externalities associated with automo-
bile use (congestion, environmental damage, collisions). Part IV explores the eco-
nomics of urban education and crime, two factors that play key roles in household
location decisions. Part V explains the unique features of the housing market and
examines the effects of government housing policies. The fi nal part of the book
explains the rationale for our fragmented system of local government and explores
the responses of local governments to intergovernmental grants and the responses
of taxpayers to local taxes.
T he text is designed for use in undergraduate courses in urban economics and
urban affairs. It could also be used for graduate courses in urban planning, public
policy, and public administration. All of the economic concepts used in the book
are covered in the typical intermediate microeconomics course, so students who
have completed such a course will be able to move through the book at a rapid
pace. For students whose exposure to microeconomics is limited to an introductory
course— or who could benefi t from a review of the concepts covered in an inter-
mediate microe conomics course—I have provided an appendix (“Tools of Micro-
economics”) that covers the key concepts.
CHANGES FOR THE EIGHTH EDITION
The eighth edition improves on the previous edition in two ways. First, I’ve
rewritten Chapter 11 (Urban Transit) to incorporate the most recent developments
in economic theory, empirical results, and practical experience with transit sys-
tems. Included in the revised chapter is a thorough analysis of the rationale for tran-
sit subsidies and a discussion of the size of the socially effi cient subsidy. In addi-
tion, the chapter has a full accounting of the relative costs of light rail versus buses.
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