Transcript Monocentric City - Pomona College Economics

Monocentric City
Assumptions
• Central export node
• All employment concentrated in core
• Steeper bid-rent for businesses than
residences
• Single transportation mode
Equilibrium
• Land allocated to highest bidder
• No business or household has incentive to
relocate
Land Use in Monocentric City
• Office firm will
be highest bidder
within 1 mile of
center
• Residential use
between 1 and 3
miles of center
• Farms beyond 3
miles
Implications
• Separation of different types of land uses
• House prices decline with distance from
center
• House size increases with distance from
center
• Commuting time increases with distance
from center
• All employment concentrated in core.
Introduction of Street Car
(Partial Equilibrium)
• Reduces commuting cost
• Changes slope of bid-rent. It becomes less
steep
• Expands boundaries of city because
residents will now outbid farmers for land at
edge
• Residents also will outbid businesses for
land near CBD border
Decrease in Commuting Cost
16000
14000
12000
10000
Offi ce
Res.Befor e
8000
Res. After
Far m
6000
4000
2000
0
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Effect of Decrease in Commuting Costs
Before
Office: 0-1 mile
Residential: 1-3
Farm: 3 +
Land rent at CBD
boundary: 8,000
After
Office: 0-0.826
Residential: 0.826-3.5
Farm: 3.5 +
Land Rent at CBD
boundary: $8941
(approx)
General Equilibrium
• Labor supply = Labor demand
• Expansion of residential district increases labor
supply; Shrinkage of CBD decreases labor
demand
• Excess supply of labor depresses wages
• In response, bid-rent of office firm will shift up;
bid-rent of residential shift down.
• Workers have lower commute cost,but also lower
wages. Landowners benefit.
Income Segregation (Alonso-Muth)
• Land consumption and commuting cost
increase with income.
• If income elasticity of demand for land is
large relative to income elasticity of
commuting cost, then rich choose to live
further from center than will poor.
• Wheaton’s findings suggests elasticities
same.
Alonso-Muth Theory of Income
Segregation