Regional Economics, European Policies and International Cooperation

STUDIORUM UNIVERSITAS GOMENSIS

UNIVERSITÀ DEGLI STUDI DI BERGAMO

Regional Economics, European Policies and International Cooperation Academic Year 2023/2024 Accessibility and location Prof. Alberto Brugnoli

Obiettivo

• Presenting theories of location, neoclassical in nature, in which the competition between activities to obtain locations closer to the market (accessibility to central areas, business location/city centre) is resolved with a very stringent economic logic: the activities that locate closer to the centre are those that are able to pay a higher rent for those areas.

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Contenuti

1. Accessibility and transportation costs: land value and use
2. The location of agricultural activities: the von Thunen model
3. The urban location of firms: the Alonso model
4. The urban location of households
5. Recent developments of the general equilibrium model
6. Critical remarks
7. Generalized accessibility and the gravity model
8. Review questions

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Riferimenti bibliografici

• Capello R,. Regional Economics, Routledge, 2nd Ed., 2015, Chapter II

REGIONAL ECONOMICS SECOND EDITION ROBERTA CAPELLO STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Accessibilità e costi di trasporto: valore e uso del suolo

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Accessibilità e costi di trasporto: valore e uso del suolo - Aree di produzione

Production areas . These models abandon the endeavour to identify the market areas of each producer and address an issue that has not yet been mentioned: how to define a 'production area', meaning by this the physical space (the land) occupied by an individual economic activity. . The production site assumes a spatial dimension and extends across a territory, while the consumption site (the market) is punctiform.

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Accessibilità e costi di trasporto: valore e uso del suolo - Principio di organizzazione spaziale

Principle of spatial organization of activity: accessibility . In these theories, location choices are dictated by a specific principle of spatial organization of activity: namely 'accessibility', and in particular accessibility to a market or a 'centre': - for firms, high accessibility means that they have easy access to broad and diversified markets for final goods and production factors, to information and to the hubs of international infrastructures; - for people, accessibility to a 'central business district' and therefore to jobs means that their commuting costs are minimal, while at the same time they enjoy easy access to a wide range of recreational services restricted to specific locations (e.g. theatres, museums, libraries) and proximity to specific services (e.g. universities), without having to pay the cost of long distance travel.

STUDIORDA UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Accessibilità e costi di trasporto: valore e uso del suolo - Costo del terreno o rendita fondiaria

Cost of land or land rent . The cost of land, or land rent, becomes an important element characterising location choices; actually, it becomes the sole principle that explains location choices by all activities, whether agricultural, productive or residential. . Assuming the existence of a single central business district, owing to high demand for central locations with their minimum transportation costs, land closer to the centre costs more; a condition accentuated by the total rigidity, at least in the short-to-medium period, of the urban land supply.

STUDIORDA UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Accessibilità e costi di trasporto: valore e uso del suolo - Logica economica della concorrenza tra imprese

• Firms able to locate in more central areas are those able to pay higher rents for those areas.

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Accessibilità e costi di trasporto: valore e uso del suolo - Localizzazione nello spazio urbano

• The strength of these models is the elegant and irrefutable logic with which they account for the distribution of productive, agricultural and residential activities in a geographic space from which they eliminate every differentiating effect except for physical distance from the centre.
• They are particularly well suited to analyze the location of industrial and residential activities in urban space.

STUDIOROM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Accessibilità e costi di trasporto: valore e uso del suolo - Nuova economia urbana

New urban economics . The focus of these models, after concentrating in the early 19th century on the spatial distribution of agricultural activities (von Thunen), has since the 1960s moved towards the urban context (Isard, Beckmann, Wingo, Alonso). . The model of the monocentric city soon became a free-standing school of thought within location theory, where it was labelled 'new urban economics'. . This corpus of theories endeavoured to develop general equilibrium location models in which the main interest is no longer decisions by individual firms or households. Instead, the main areas of inquiry become definition of the size and density of cities, and identification of the particular pattern of land costs at differing distances from the city that guarantees achievement of a location equilibrium for all individuals and firms in the city.

STUDIORON UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Localizzazione delle attività agricole: il modello di von Thünen

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Localizzazione delle attività agricole: il modello di von Thünen - von Thünen

The von Thunen model [1826] . First location model based on the hypothesis of a continuous production space and a single punctiform final market. . This model has generated the entire corpus of theories on the urban location of economic activities.

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Localizzazione delle attività agricole: il modello di von Thünen - Assunzioni

1. There exists a uniform space where all land is equally fertile and transport infrastructures are identical in all directions (isotropic space)
2. There is a single centre, the medieval town, where all goods are traded (i.e. there is a specific market place)
3. Demand is unlimited, an assumption which reflects the supply-oriented nature of the model: the location equilibrium depends solely on the conditions of supply
4. The production factors are perfectly distributed in space: the allocation of land among alternative production activities does not derive from an uneven spatial distribution of the production factors
5. There is a specific production function, with fixed coefficients and constant returns to scale, for each agricultural good; this assumption entails that the quantity of output obtainable from each unit of land and the unit cost of production are fixed in space
6. Perfect competition exists in the agricultural goods market: farmers therefore take the prices of the goods they produce to be given
7. £ Unit transport costs are constant in space (t): the total cost of transportation depends on the distance between the production site and the town, and on the volume of production. Transport costs may vary according to the crop

STUDIOROM UNIVERSITAS UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Localizzazione delle attività agricole: il modello di von Thünen - Elementi principali del modello

• The rent is obtained as a residual (that would also characterize subsequent models): the price that farmers are willing to pay for land (r(d)) is the remainder left when transport and production costs, including a certain remuneration (profit) for the farmer, have been subtracted from revenues.
• On the assumption that there are three categories of farmers (A, B and C), each of them producing a specific agricultural product with a differing degree of perishability, a rent supply curve (-tx) can be constructed for each category. Partially because goods are perishable to differing extents, the rent supply curves assume different positions and slopes.
• The category of farmers who produce the most perishable good will have a productive process that uses the land in the most intensive and economically efficient way (geometrically, the highest intercept on the Y-axis, equal to (p-c)x); this category will be more willing to pay the rent charged for land one kilometre closer to the town (geometrically, the steeper slope of the straight line, equal to (-tx)).

STUDIORDA UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Localizzazione delle attività agricole: il modello di von Thünen - Allocazione del terreno tra tre agricoltori

[2.1] r(d) = (p-c-td)x [2.2] = - TX dd dr(d) Slope: - td Intercepts: (p-c)x maximum value of rent in the town (p-c)/t maximum distance from the town Unit rent r(A) r(B) dr(d) Market place r(C) Distance A a" b c' B C Distance The actual rent realized by the landowner from cultivation of his land is the envelope of the three rent supply curves

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Localizzazione delle attività agricole: il modello di von Thünen - Distribuzione spaziale delle attività agricole

• In the competition between farmers for the most affordable land, each unit of land will be allocated to that production that can offer the highest yield.
• Within the area allocated to each crop, individual growers will be indifferent to location, as each location guarantees the same (normal) level of profit.

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)

Localizzazione delle attività agricole: il modello di von Thünen - Punti di forza del modello

• Ability to demonstrate that it is simple distance from, or accessibility to, the town (expressed by transport costs) that accounts for differences in land rent. It thus departs from the classical Ricardian view that differences in land profitability are due to different degrees of fertility. By so doing, it is able indirectly to explain the location of economic activities in space.
• General spatial equilibrium model: starting from the assumption of a homogeneous space (an un-cultivated plain), and giving for granted a normal profit level, common to all categories of farmer, the model is able to identify at the same time the location of the different categories and the rent level.

STUDIORUM UNIVERSITÀ DEGLI STUDI DI BERGAMO A. Brugnoli - (R. Capello, 2015)