The urban economics of Adam Smith

Article Abstract:

The inclusion of microeconomic theories related to urbanization, population location, transport costs, and urban hierarchies in Adam Smith's 1776 work, The Wealth of Nations, has been largely overlooked. Urbanization theories and theories of space and location as influential factors on community and urban development are shown to be central themes in Adam Smith's work. Smith's early work is remarkable for the way in which it predicts many of the phenomena occurring more recently in urban and community centers. The predictions referred to are derived from an urban hierarchical classification model based upon Smith's work. The four hierarchical levels distinguished by Smith are: (1) capital cities (such as London), (2) great towns (such as Birmingham or Glasgow), (3) small market towns (such as Kircaldy), and (4) very small villages (such as are found throughout the Scottish Highlands).

Criticism and interpretation, Economists, Community development, Microeconomics, Industrial locations, Industrial location, Smith, Adam (American politician)

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Capitalization of local income taxes

Article Abstract:

Social scientists have not paid much attention to the area of local personal income taxes, and there is a lack in the literature of a consideration of the differences in residential property values arising in a Tiebout setting where different localities levy income taxes at different rates. There is a large body of research covering the capitalization of differentials in property taxes across jurisdictions, indicating that differentials in local income taxes would be capitalized similarly. A hedonistic regression study of the Philadelphia Primary Metropolitan Statistical Area was conducted to prove this expectation. Research results indicated that, while high values may have been the result of a low tax rate that made the community more attractive, low rates may have been a reflection of the high values of the property in so much that low rates could raise adequate revenue.

Analysis, Economic research, Housing research, Tax research, Income tax, Property taxes, Property tax

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Agglomeration economies and building height

Article Abstract:

M. Fujita and H. Ogawa conducted urban research using a model where households and firms compete for land. Fujita and Ogawa found that transportation costs supported by household and agglomeration economies between firms were responsible for setting the city's configuration. In this research, the size of the city, and the densities of firms and households for each point of the space are used as endogenous variables. The two functions compete for housing instead of directly occupying land.

Economic aspects, Buildings, Transportation, Population density, Zoning law, Traffic surveys

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