ECP-4613 Chapter 2: Chapter 2 Book Notes
Document Summary
Cities exist because people aren"t self sufficient we specialize in a labor task and use our earnings from doing this task to buy the things we can"t produce ourselves. Labor specialization and large-scale production allow us to produce/consume more. In cities, we achieve a higher standard of living but have to deal w congestion/noise/pollution. Here, there is no benefit from specialization bc everyone is equally prod. Specializing in one good and trading for the other would incur a transaction cost = product that could be prod in time needed to execute trade. No benefit from prod in factories bc a person is equally as productive as a factory would be. The absence of exchange guarantees uniform dist of pop. In locational equil, price of land is the same everywhere, and pop dens would be uniform; all sites are equally attractive so loc equil requires the same price of land everywhere (axiom #1)
