PRACTISEMAKESPERFECT

ANSWERINGSTUDYQUESTIONS
1.Sullivan,Chapter8,#1
Thebidrentfunctionforthetransmitterbasedfirmishorizontaluptotwomilesfromthecity
center.Atthecitycenter,thetruckbasedfirmiswillingtopay$Cmorethanthetransmitter
firm.Thefirmsthatusethetruckwilllocateclosetothecitycenter.Thetransmitterfirmswill
locatefurtherout.
2.Sullivan,Chapter10,#9
a.Thestreetcar(forworkers)precededtheintracitytruck(forfreight),sothecostof
transportingworkerswasinitiallylowrelativetothecostofmovingfreight,generatingthe
monocentriccity.Whentheintracitytruckwasdeveloped,thecostofmovingfreightdecreased,
causingfirmstomoveclosertotheirsuburbanworkers.
b.Iftheintracitytruckhadprecededthestreetcar(andtheautomobile),thecostofmoving
peoplewouldhavebeengreaterthanthecostofmovingfreight,sofirmswouldhavelocated
closetotheirsuburbanworkerseveniftheyshippedtheiroutputthroughacentralexportnode.
3.Sullivan,Chapter10,#13
AnRFEprovidescentralizedservicesforitsresidents.Intrabuildingtravelcostsareimportant
becausetheelderlytravelfrequentlytothecentralservicecenterandhaverelativelyhighunit
travelcosts.IFthecostofverticaltransportation(inelevators)islessthantheunitcostof
horizontaltravel(walking),itisrationaltobuildupratherthanout.
4.Sullivan,Chapter11,#6
Retailerswhowillrelocatearelikelytobethosewith(i)smallscaleeconomiesrelativetoper
capitademand(industrieswithalargenumberofsmallretailersand(ii)relativelysmall
shoppingexternalities.
5.Sullivan,Chapter11,#9
a.Thetaxissplitbetweenlandownersandhousingconsumers(aswouldasalestaxbesplit
betweenconsumersandproducers).Thetaxdecreasesthesupplyofhousingandincreasesthe
priceofhousing,soconsumersbearpartoftheburdenofthetax.Thetaxalsodecreasesthe
demandforland,decreasingthepriceofland,solandownersbearpartofthetax.
b.Thebidrentforfringelanddecreases,decreasingthecity'sradius.
c.Therewillbelessincentiveforfiscalzoningbecausethefringedevelopmentwillpaycloserto
itsfullshareofpublicservicecosts.
6.InhisbookPovertyandPlace,PaulJargowskyobservesthatbetween1970and1990,"Poor
persons,whetherwhite,blackorHispanic,becameincreasinglyconcentratedinhighpoverty
areasandmoreisolatedfromtherestofsociety.Thefastestgrowingmeasureofneighborhood
poverty,however,wasthenumberofcensustractsclassifiedashighpovertyareas.Inother
words,thephysicalspaceoccupiedbyblightedurbanneighborhoodsexpandedfasterthanthe
numberofresidentsofsuchneighborhoods.Larger,butlessdenselyinhabited,ghettosand
barriosnowoccupythecenterofmanymetropolitanareas,bothasymptomofmiddleclass
flightandthehollowingofAmericancities."

a.TrytoexplainthisobservationusingtheAlonsoMuththeoryofincomesegregation.Canthis
theoryexplainadeclineindensityinpoor,innercitycommunities?
First,describetradeoffbetweenspace/housingsizeandcommutingcosts.Explainthat
commutingcostsincludedopportunitycostandarehencearelikelytobegreaterforrichthan
forpoor.However,richwillalsodemandlargerhouses(hence,moreland).DiscussAlonso
Muth'stheorythatrichwillliveoutsideofcityandpoorinsideiftheincomeelasticityofdemand
forlandexceedstheincomeelasticity.Thistheorycouldexplainandexpansionofphysical
spaceoccupiedbypoorbyachangeinbidrentfunctions.Forexample,whathappensif
manufacturers'bidrentfunctionshiftsdownandbecomesflatter?Thinkaboutwhatcouldmake
thishappen.Anendresultislikelytobelowerlandpricesandlowerlandpriceswouldleadto
lessdensity.
b.Considertwootherexplanationsfortheconcentrationofpovertyinurbancenters.Arethey
consistentwithJargowsky'sobservation.
Foreachalternativetheory,brieflydescribethetheory,thendiscusshowitmightexplaina
larger,butlessdenselypopulatedpovertyarea.Sometheoriesmaynotbeabletoexplainthis.I
willbelessinterestedinyourconclusionthaninyourdemonstrationthatyouunderstandwhat
thetheorysaysanddoesn'tsay.
Forexample,Glaeserandotherssuggesttheconcentrationofthepoorincentralcitiesreflects
theavailabilityofpublictransportation.Anincreaseinavailabilityofpublictransportation
wouldlowercommutingcostforpoorandthatshouldflattentheirbidrentfunction.Thiscould
conceivablyexpandtheboundaryofthepoorneighborhoodbutitdoesn'texplainadecrease
indensitybecauselowercommutingcostshouldincreaselandrent.Higherlandrenttypically
meansgreaterdensity.
7.Useurbaneconomicanalysistoexplainhowanurbangrowthboundarymightaffecthousing
prices.Isthispredictionsupportedbyempiricalevidence?
Atheoryisoutlinedonpages304305inyourtextbook.Youmightalsonotethattheurban
growthboundarymightincreaseacity'sattractiveness.Theimplicationisthattheservice
boundaryshouldincreasethepriceoflandinsidetheboundary.Thencitethearticleon
Portland,Oregon.

8.Aneconomistarguesthatzoninghasnegativeeffectsonhousingmarketsbecauseitincreases
thecostofconstruction.Anurbanplannersaysthatzoningimprovesthequalityofurbanlife.
Whatisthesourceofthisdisagreement?
Youcouldpickaspecificzoningexamplehereordiscusszoningingeneral.Thekeyistodiscuss
bothdemandandsupplysideeffectsandtoacknowledgethatzoningmaycorrectfornegative

externalities.YoucouldalsocitethecaseofHoustonasanexamplewherethemarketmightbe
selfcorrecting.
9.Latinos,AsiansandAfricanAmericansformthemajorityofthepopulationintheCityof
Pomona,buttheirnumbersaresmallintheCityofClaremont.Proposeandevaluatethree
possibleexplanationsforthishousingsegregation.
Possibleexplanationsinclude(a)collectiveactionracism;(b)positivegroupaffinity;(c)
differencesinhousingcharacteristics;(d)income;(e)individualdiscrimination,etc.Ineach
case,presenttheexplanation,discussitsimplicationsforprices,discusswhetheritseemsto
describethePomona/Claremontsituation.
10.Issegregation(incomeorrace)goodorbad?
Inthisessay,youcantakeapositionononesideortheother,butbesureandacknowledge
opposingarguments.Youressayshouldcitearticlesfromyourreadinglistandyourtext.