1. In the words of Wilbur Thomson, “we treat the scarcest resource in
cities as if it were a free good.” In the near future, New York City
will join London, Singapore and other cities in imposing a congestion
toll on automobiles using city streets in Manhattan below 60th Street.
Explain the economics behind this policy.
2. Producers in cities generate external economies for each other. This
occurs for several reasons. They generate a pool of appropriately
skilled labor each can draw upon. This makes matching worker to the
needs of specific firms easier. They generate economies of scale in
specialized subcontractors needed for innovation as well as managing
international business networks. So businesses, even competing
businesses, share subcontractors, consultants and the like. Finally the
interplay of producers in close proximity to one another enhances both
organizational learning and innovation.
a. Explain how producer sharing generates agglomeration economies and
advantages to urban locations.
b. Explain how matching generates agglomeration economies and
advantages to urban locations
c. Explain how learning generates agglomeration economies and
advantages to urban locations
3. How does segregation interfere with sharing, matching and learning,
thereby slowing urban growth?
4. Apply the notions of sharing, matching and learning to a highly
segregated neighborhood economy, for examples, an immigrant community
(Little Caribbean, Little Haiti, Chinatown, etc.) or African-American or
Hispanic-American communities.
5. How is it possible for ground rent to be higher in low-income
neighborhood than in middle-income neighborhoods?