Month July 2008

$5 Gas and Commuting Costs

Environmental and Urban Economics – Commuting Cost Arithmetic When people work in the suburbs, will they save many gallons of gasoline if they move to the center city? Yes, they will be closer to their center city friends and stores but they will still need to reverse commute by car to their jobs (unless they can ride the Google Bus from Center City San Fran to Mountainview). So this raises the question of whether high gas prices will push employers to move back to the center city? Employers who need land (think of Google) will be unlikely to want to rent out 35 stories of a skyscrapper. Total One Way commute cost = price of a gallon of gas + hourly wage Case #1: you make minimum wage = 5 + 7 = 12 and the share of expenditure on gas = 5/12 Case #2: Ivy League graduate = 5 + 100 = 105 and the share of expenditure on gas = 5/105 So this simple example highlights how the wage can swamp the price of gas for the high skilled but for the less educated, gas is a huge part of the commute cost. Interesting point. CBDs tend to attract highly talented workers, who tend to earn higher salaries. So, will those people have the incentive to move closer? Probably not much. However, there are plenty of middle wage workers who commute to CBDs, and may be tempted to locate closer. But, a firm that desires to attract the most talented workers will most likely locate in the CBD anyway. Thus, I wouldn’t expect as much difference in firm location preference, compared with the shifts in housing location preference. Those who work in suburban locations may end up moving closer to their jobs, making living patterns more compact near […]

link: Medieval Cities

I have little expertise in Medieval Cities and have little input, but thought it was interesting: Marginal Revolution – Medieval cities: Europe vs. the Arabic world also, Econlog – Producer and Consumer Cities Cities in the Arab world were on average much larger than those in Europe, and the size of the “primate” city – the megapolis such as Baghdad, Damascus, Cairo or Istanbul – was much bigger; a fact that is indicative of a predatory state and low trade openness. Europe, on the other hand, developed a very dense urban system, with relatively small principle cities. Big cities in Europe were quite often located near the sea, being able to optimally profit from long-distance trade, whereas the largest cities in the Arab world were almost all inland. The sociologist Max Weber introduced a distinction between ‘consumer cities’ and ‘producer cities’. Using this classification, Arab cities were – much more than their European counterparts – consumer cities. The classical consumer city is a centre of government and military protection or occupation, which supplies services – administration, protection – in return for taxes, land rent and non-market transactions. Such cities are intimately linked to the state in which they are embedded. The flowering of the state and the expansion of its territory and population tend to produce urban growth, in particular that of the capital city. In Europe cities are instead much closer to being producer cities. The primary basis of the producer city is the production and exchange of goods and commercial services with the city’s hinterland and other cities. The links that such cities have with the state are typically much weaker since the cities have their own economic bases. It is this aspect that accounts for the fact that Arab cities suffered heavily with the breakdown of the […]