Space and Economics Chapter 1: Introduction Author Wim Heijman (Wageningen, the Netherlands) July 16, 2009

1. Introduction 1.1 Borders of the discipline 1.2 Spatial concepts 1.3 Von Thünen's land rent theory 1.4 Weber's theory on location 1.5 Summary and preview

1.1 Borders of the discipline Regional Economics deals with the allocation of economic activities over space. Two aspects: Micro or location; Macro or region Bordering disciplines: Human Geography, Regional Science, International Economics Neoclassical versus Institutional Approach The central object of regional economics is scarce (economic) space

1.2 Spatial concepts Space: the physical substrate of human actions A space is defined by dimensions, e.g. a square is a two dimensional space The value of a dimension is called a coordinate A coordinate is measured in a distance unit (metre, mile etc.) A unique combination of coordinates is called a location

1.2 Spatial concepts An economic space can be defined as a bounded space of locations that can be profitably used for various purposes These locations can be called scarce A scarce location bears a rent A route is the set of locations connecting two designated locations A border is the set of locations that demarcates a bounded space An ‘economic network’ is a network of relations between economic subjects

1.2 Spatial Concepts

1.2 Spatial concepts A region is a bounded space that is part of a bigger space Example of regional division: NUTS classification NUTS: Nomenclature des Unités Territoriales Statistiques. http://www.raumplanung.uni-dortmund.de/irpud/pro/ten/nuts_e.htm

1.3 Von Thünen's land rent theory Johann Heinrich Von Thünen (1783-1850) 1826: Book: "The isolated state in relation to agriculture and the national economy" Von Thünen tried to explain the productivity of land and the intensity of land use. Land will be used for the activity that generates the highest possible rent

1.4 Weber's theory on location theory of location developed at the beginning of the 20th century by Alfred Weber (1868-1958) firms aim at minimizing transportation costs labour costs may cause deviation from minimum transportation costs location Another important aspect of Weber's theory is "agglomeration". In the "new economic geography" agglomeration benefits are indicated as "external economies of scale"

1.5 Summary and preview Chapters 2, 3, 4, and 5 deal with the theory of location of the producer (Ch. 2-4) and consumer (Ch. 5) Chapters 6, 7, 8, 9, and 10 deal with regional development theory and its applications