Transport costs and urban development

This article offers a selective introduction to two recent books on spatial economics. It focuses in particular on the light that they shed on the role in urban development of transport costs (section 3), rents (section 4) and governance (section 5). Thus, lower transport costs are found to favour fewer, larger settlements rather than small, dispersed settlements, as is sometimes assumed. Rents, often overlooked or considered to be of secondary importance in other treatments, here prove to play a key role in the spatial allocation of activity. By reflecting the costs and benefits attaching to particular locations, they are shown to provide an important market signal as well as a potential policy instrument through taxation. Finally, it is suggested that although infrastructure provision and the role of government policy is rather skated over by the authors of these books, the insights provided by their analysis should be helpful in developing better policies for the future.