Urban Economics Cheat Sheet

The core ideas of Urban Economics distilled into a single, scannable reference — perfect for review or quick lookup.

PiqCue — piqcue.com/urban-economics/cheatsheet

Quick Reference

Agglomeration Economies

The productivity benefits that arise when firms and workers concentrate in geographic proximity. These benefits stem from knowledge spillovers, thick labor markets, and shared inputs and infrastructure that reduce costs and spur innovation.

Monocentric City Model

A foundational urban economics framework (Alonso-Muth-Mills) in which land values and density decline with distance from a single central business district (CBD). Residents trade off commuting costs against cheaper land farther from the center.

Bid-Rent Curve

A graph showing the maximum rent a household or firm is willing to pay at each distance from the city center. It slopes downward because commuting costs rise with distance, reducing willingness to pay for land.

Spatial Equilibrium

A condition in which no household or firm can improve its utility or profit by relocating, because differences in wages, housing costs, and amenities across locations exactly offset each other.

Housing Supply Elasticity

The responsiveness of new housing construction to changes in price. Cities with elastic supply (few building constraints) see moderate price increases when demand rises, while cities with inelastic supply (strict regulation, geographic limits) see prices spike.

Capitalization

The process by which the value of local amenities, public services, or disamenities is reflected in property values and rents. Positive features raise values; negative features reduce them.

Tiebout Sorting

The theory that households 'vote with their feet' by choosing to live in jurisdictions offering their preferred combination of public services and tax rates, leading to sorting by income and preferences across municipalities.

Urban Wage Premium

The empirical finding that workers in larger, denser cities earn higher wages than comparable workers in smaller cities, reflecting agglomeration-driven productivity gains and the higher cost of living in urban areas.

Land Value Tax

A tax levied on the unimproved value of land rather than on buildings or other improvements. Advocates argue it discourages speculative land-holding, encourages development, and does not distort building decisions.

Edge City

A concentration of business, shopping, and entertainment outside a traditional central business district, typically near highway interchanges. Joel Garreau coined the term to describe the polycentric reality of modern metropolitan areas.

Key Terms at a Glance

Agglomeration Economies:Productivity advantages from the geographic concentration of economic activity, including knowledge spillovers, labor pooling, and shared inputs.

Bid-Rent Curve:A curve showing the maximum rent a user will pay at each distance from the city center.

Capitalization:The reflection of amenities or disamenities in property values.

Central Business District:The traditional commercial and business center of a city with the highest land values and density.

Central Place Theory:Christaller's model explaining the distribution, size, and spacing of cities based on market areas for goods and services.

Commuting Costs:The total monetary, time, and psychological costs of traveling between home and work.

Congestion Pricing:Fees charged to drivers entering congested areas to internalize social costs of driving.

Edge City:A suburban concentration of business, shopping, and entertainment outside the traditional downtown.

Externality:A cost or benefit of an economic activity that affects third parties not directly involved in the transaction.

Filtering:The process by which housing units pass from higher-income to lower-income occupants over time as they age.

Fiscal Zoning:Using land-use regulations to attract tax-positive development and exclude costly service demands.

Hedonic Pricing:A method decomposing property prices into implicit values of individual attributes.

Housing Supply Elasticity:The responsiveness of new housing construction to changes in price.

Knowledge Spillovers:Informal transmission of ideas and techniques between nearby economic agents.

Labor Market Pooling:The agglomeration benefit of many workers and firms in one location, improving job matching.

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