Regional Economics

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Regional Economics

• George Horváth
• Department of Environmental Economics
• george_at_eik.bme.hu

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Phases of urban growth
Total urbanised area
Central town
Agglomerative ring

• Suburbanisation

Urbanisation
Disurbanisation
Reurbanisation
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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

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Christallers 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

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A hexagonal system
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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.

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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

Category Pop. of Centre Pop. of Area No. of Centres
1 1 000 2 000 243
2 6 000 12 000 81
3 36 000 72 000 27
4 216 000 432 000 9
5 1 296 000 2 592 000 3
6 7 776 000 15 552 000 1
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System of Centres graphically
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Löschs 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

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Löschs market networks graphically
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Multiplicators and Tinbergens Model

• The theories of Christaller, Lösch and Keynes may
  be connected in Tinbergens 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

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Jan Tinbergens Model

• Lets 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

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An example of Jan Tinbergens Model

• Lets 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 Tinbergens 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
• Lets 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

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Effect of sectorial change on spatial location
Settlement type Original population Population after change Change in
Village 55 000 40 000 -27
Low-level centre 13 750 13 000 -3
Medium-level centre 16 045 19 394 21
High-level centre 15 385 27 273 77
Total region 100 000 100 000 0
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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

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