Lyman Stone: In Defense Of Downward Sloping Urban Housing Demand Curves
To start with, Nick acknowledges that cities may arise as a result of some kind of random variation, or indeed as a negative feature. Cities may exist because there are geographic chokepoints, or places where geography uniquely favors certain spots. Now, I’m not a fan of the idea that geography is destiny for cities, and instead tend to think that urban populations arise mostly due to the demands for labor, skills, and capital arising from the specific production functions of specific, historically-contingent industries.
But nonetheless, I’m also a big believer in not ignoring the blindingly obvious: most of America’s biggest cities are not located out in the middle of a featureless plan where it is “easy” to build a city. Most of the world’s biggest cities are not in such environments. Nor are cities located in the most desirable locations; they are located in places where they adequately meet the specific needs of the production functions of specific, historically-contingent industries. There has been some historic commonality across many industries, such as access to transportation for both inputs and access to market.