Regional Economics

Regional Economics George Horváth Department of Environmental Economics george@eik.bme.hu

Phases of urban growth Total urbanised area Suburbanisation Central town Agglomerative ring Urbanisation Disurbanisation Reurbanisation 1

Urban networks and their hierarchies • The theory of central locations os one of the most important theories of regional economics • Its development is connected to the name of two people: • August Lösch (1942): The Spatial Order of Economics • Walter Christaller (1933): Central Locations in Southern Germany 2

Christaller’s model • Each product has its own maximal market area and maximal price, which – ceteris paribus – will depend on the production and transport costs • If transport costs are relatively large compared to production costs, and consumers are less willing to pay a higher price, the market area will be relatively small • If transport costs are relatively small and/or consumers are willing to pay a higher transport cost, the market area will be bigger. • This all depends on the properties and the demand of the product 3

A hexagonal system 4

System of Centres • The rank of a city is not determined by its population or territory • Instead, it is determined by how many different kinds of trading and services functions they fulfil, and what market area it serves • This is the so-called „importance-sufficit” • If the same basket of goods and services are consumed frequently by a larger number of people, there needs to be a denser network expanding to many localities • If fewer people consume less frequently, a smaller network will do, which will be restricted to greater centres only. 5

System of Centres – in numbers m = category number of settlement Pm = the population served by a centre of the mth order Cm = the population of a centre of the mth order K = the part of population of the area living in the Centre S = the number of lower order areas pertaining to a larger area If k = 0,5 and s = 3, then: 6

System of Centres – graphically 7

Lösch’s approach to the markets • Each product and service has a market area of a different size • This would trigger us to create countless market areas and centres, which is obviously irrational. • If we align networks of markets to the Primary Centre, and then we rotate these around the Centre, such that as many networks and centres should coincide… • … experience will tell us that this will result in 12 sectors, • 6 sectors will have a much larger number of centres than the other 6 8

Lösch’s market networks – graphically 9

Multiplicators and Tinbergen’s Model • The theories of Christaller, Lösch and Keynes may be connected in Tinbergen’s Model • In this model, the network of settlements is such a system, whose ultimate goal is the provision of food-producing village dwellers with products and services • In developed countries, this is done by Centres on different levels and providing particular goods and services 10

Jan Tinbergen’s Model • Let’s take k as the number of Centres on the various levels • Each centre on any level produces the goods and services assigned to them… • …but each centre is also capable of producing the goods and services on inferior levels. • Y is the national product of the country • L0, L1, L2, … Ln are the ratios of the products and services belonging to each functional category in the national product of the country 11

An example of Jan Tinbergen’s Model • Let’s take the population of a region to be 100 000 people • 55% of all income is spent on agricultural products, • 20% is spent on low-level services • 15% is spent in medium-level services • 10% is spent on high-level services • According to Tinbergen’s Model, 55 000 people live in villages, 13 750 in low-level centres, 16 045 in medium level centes, and 15 385 live in high-level centres • Let’s suppose there is a change in demand: • 40% will be spent on agricultural products • 25% on low-level services • 20% on medium-level services • 15% on high level services 12

Effect of sectorial change on spatial location 13

Rank-size models • Rank-size models are an alternative approach to urban networks, essentially yielding the same structure • This distribution holds for • Distribution of wealth among people, • Avalanches, • Forest fires, • Floods, • Distribution of frequency and magnitude of wars, • Structure of urban network 14

Regional Economics