| THE OHIO STATE UNIVERSITY | Spring Quarter 2008 |
| City and Regional Planning | Professor Philip A. Viton |
City and Regional Planning 781 — Spatial Models in Urban Planning
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| Credits: | 4 hours |
| Sequence No.: | 05170–7 |
| Meeting: | 195 Knowlton Hall |
| Time: | Monday, Wednesday 12:30–2:30 p.m. |
| Midterm Examination: | Wednesday May 7, during class. Bring a calculator. |
| Final Examination: | Monday, June 2: 11:30 –1:30. Bring a calculator. |
| Instructor’s Office: | 296 Knowlton Hall |
| Office Hours: | Monday, Wednesday 2:30–4:00 pm or by appointment |
| E-mail: | viton.1@osu.edu |
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This course will introduce you to microeconomic approaches to urban planning problems. Throughout the course, the emphasis will be on developing your understanding of basic economic terms and reasoning; and on the application of these to problem-solving and policy analysis in urban planning.
There will be a closed-book midterm examination given in class. Bring a calculator. This will count for 30% of your final grade. The remaining 70% of your grade will be based on a closed-book final examination at the regularly scheduled time.
Both the midterm and the final examinations will involve the solution to problems: in effect, applications of what we shall be talking about in class. To give you some idea of what you can expect, I have made copies of problems and answers from previous years available in the KSA library. (These are also available online: see below under Texts). I strongly advise you to attempt the problems on your own and then compare your answers with mine: it is extremely easy to convince yourself that you’ve completely understood everything in lectures, only to find when you’re confronted with a problem in an examination, that you really don’t see what to do with the lecture knowledge. Note that the distributed problems were meant to be solved over the course of a week: the examination problems will obviously not be so difficult or time-consuming. Also, some of the problems were meant to illustrate how you could use data and statistical methods to give empirical content to the concepts. Again, this was because the problems were to be solved over the course of a week: you will not be expected to compute regression lines in any examination.
In order to focus more on the applications of economic analysis to planning concerns I will devote a few intensive sessions to a review of the basic concepts, and then proceed to use those concepts to think about planning and public-sector problems. You are responsible for studying the basic material in a textbook. The examinations will not be restricted to material covered in class. The intensive sessions are identified in the reading list as “Review” sections, and contain a check-list of the basic concepts with which you are expected to become familiar. You are strongly advised to begin working on this material before the reviews, which will go very quickly.
I have not ordered a text for the course: most of the material we shall be discussing is covered in any good microeconomics text (see below). I shall, however, make available selected chapters from two books which I particularly like. These are Microeconomics by Steven Call and William Holahan, and Price Theory by David D. Friedman. The two are meant to be complements, and not substitutes: Call and Holahan is better on the analytical details, while Friedman is stronger on the intuition behind the results. I urge you to read both.
Excerpts from both books will be available for in the KSA library, in the CRP 781 Oblique File. You may also be interested to know that Friedman’s book is available on the Internet, at
— the graphics in this version aren’t as good as those in the printed copy, but on the other hand it is easy to obtain — and it is free. In addition, the CRP 781 web site (see below) will contain downloadable PDF versions of the Problem and Answer sets as well as the indexes to Call and Holahan and Friedman. The readings are grouped broadly by sections on the Reading List, below and each is available in two parts: one for the Call-and-Holahan excerpts, and one for the Friedman excerpts.
Remember that the readings cover — and you are responsible for — substantially more than is covered in the lectures. Note that neither book covers spatial economics: for this material you will need to rely on your class notes.
With the exception of the spatial material, the topics we shall be considering are covered in many texts on microeconomics (“price theory”): here is a selection. Note that there may be more recent editions of some of the books: these are just the editions I happened to have handy. Any of these would be a substitute for Call/Holahan; less so for Friedman, which is a somewhat idiosyncratic book.
More problems If you’d like to practice on more problems than I’ve provided, you might take a look at the Schaum’s Outline book Intermediate Microeconomics; this is probably available in the bookstore.
More advanced books The following texts also cover the material, but are more advanced in their treatment and they may be incomprehensible if you’re not up on math at least through second-year calculus.
Spatial economics There is no really good elementary book on spatial economics, so for these sections of the course you will have to rely on lectures.
Basic urban and regional economics Here are some books specifically devoted to urban and regional economics. They should be used in conjunction with a basic microeconomics text.
Advanced urban and regional economics (If you’re planning to do research in this area, I particularly recommend Fujita’s 1989 book):
There is a small web site for the course at
I will place copies of class handouts there, generally in PDF format. If you would like to be notified by email when new materials are posted, send me an email asking to be added to the 781 mailing list.
Email: I filter spam very aggressively, and if anything looks like spam according to my system it can get deleted automatically before I see it. To protect yourself from this (as much as possible) you should include “CRP” somewhere in the subject line of any email that you send me. I usually answer email within one weekday of receiving it, so if you’re expecting an answer and don’t get one, ask me after class if I got the mail in the first place.
ADVANCED/PhD STUDENTS — CRP 881
CRP 781 is an introduction to microeconomic approaches to planning problems. It does not provide enough background for research in any of the topics we shall discuss. There is a companion course, CRP 881, which is designed as an add-on to this course, and which covers the formal (mathematical) foundations of the subject, with a view to making the research literature accessible to you. CRP 881 is tentatively scheduled for Tuesday, 2:30–4:30, in Knowlton 269, but this may be changed if enough students find it inconvenient. Come to the first meeting to discuss this.
Doctoral students, or students planning to do research involving the microeconomic approaches to planning are strongly advised to take 881 and/or the Economics 804–805–806 sequence, which is the first-year graduate sequence in microeconomics. Prerequisites for 881 are second-year calculus, and basic linear algebra. If you doubt your preparation, ask me.
COURSE OUTLINE |
Spatial price equilibrium; description of an economy.
RECOMMENDED READING: Friedman, Chs. 1, 2.
This section of the course will briefly review the basic microeconomics of individual choice. You are responsible for developing an thorough understanding of the basic concepts through a textbook and through the problem sets.
RECOMMENDED READING: Call and Holahan, Chs. 3.1 - 3.5; 3.8, 4.2a, 4.2d. Friedman, Chs. 3, 4.
CHECK-LIST OF IMPORTANT CONCEPTS IN CONSUMER THEORY: preferences utility function indifference curve price-taking behavior budget constraint marginal rate of substitution optimal choice demand function price and income elasticities shifted demand function and movement along a demand function normal, Giffen and inferior goods.
Urban spatial structure; closed and open economies; transportation; bid-rent curves; 1- class and 2-class economies.
READING: Class notes.
This section of the course will briefly review the basic microeconomics of production and cost. You are responsible for developing an thorough understanding of the basic concepts through a textbook and through the problem sets.
RECOMMENDED READING: Call and Holahan Chs 6.1 - 6.7, 6.10, 6.11, 7.1 - 7.12, 7.15. Friedman, Chs. 5, 9.
CHECK-LIST OF IMPORTANT CONCEPTS IN PRODUCTION: technology (production function) isoquant input substitution marginal product returns to scale factor prices and iso-cost line cost-minimizing input demands cost curves: total cost, average cost, marginal cost fixed and variable costs; short-run and long-run costs and returns to scale.
This section of the course will briefly review the basic microeconomics of output determination by the firm. You are responsible for developing an thorough understanding of the basic concepts through a textbook and through the problem sets.
RECOMMENDED READING: Call and Holahan, Chs. 8.1 - 8.7, 8.11, 9.1 - 9.5. Friedman, Ch. 10.
CHECK-LIST OF IMPORTANT CONCEPTS IN FIRM BEHAVIOR: price-taking behavior profit maximization marginal revenue function under competition and monopoly supply function average revenue function determination of optimal output and price.
Spatial price equilibrium again; The Weber problem; Hotelling models; importance of transportation; the spatial monopolist.
READING: Class notes.
Competitive equilibrium; Pareto Optimality; first and second theorems of welfare economics; connection with equity concerns.
READING: Class notes, Friedman, Ch. 14, 15.
Why certain technologies imply that we can’t rely on the market to produce the right amount of some goods; how to regulate a natural monopoly (Ramsey pricing).
READING: Class notes.
Why the presence of externalities implies that the market can’t be relied on for optimality. Externalities in urban contexts; economic justification of zoning – sometimes; Coase theorem and legal rights.
READING: Call and Holahan, Chs 15.1 - 15.3, 15.6 - 15.7. Friedman, Ch. 17.
SUPPLEMENTARY READING: There is a marvellous book by David Friedman called “Law’s Order” which contains an extensive application of microeconomics to law and legal concepts. Very strongly recommended.
Non-excludability and the problems it causes. Financing the provision of public goods.
READING: Call and Holahan Chs. 15.4 - 15.5. Friedman, Ch. 17