Acceturo, Antonio, Michele Cascarano, and Guido de Blasio. 2024. “Pirate Attacks and the Shape of The Italian Urban System”. Regional Science and Urban Economics, 108: 104035.

DOI: 10.1016/j.regsciurbeco.2024.104035

Abstract

From the sixteenth to the early nineteenth century, coastal areas of Italy (especially, in the south-west) were subject to attacks by pirates launched from the shores of Northern Africa. This paper studies the long-run impact of these events. We show that in areas that were more exposed to raids, easier-to-defend but less productive locations ended up in being relatively more populated. The consequences of pirates’ attacks were still visible in the first part of the twentieth century and ceased to be statistically significant after the 1960s.

Baum-Snow, Nathaniel, and Lu Han. 2024. “The Microgeography of Housing Supply.” Journal of Political Economy, 132(6): 1897-1946.

DOI: 10.1086/728110

Abstract

We perform a comprehensive neighborhood-level analysis of housing supply. Predictions of floor space and housing unit supply elasticities using our estimates average 0.5 and 0.3 across all urban neighborhoods in the United States, exhibiting greater variation within than between metro regions. New construction accounts for about 50% of unit supply responses, with important additional roles for teardowns and renovations. Supply responses grow with central business district distance mostly from the increasing availability of undeveloped land, flatter land, and less regulation. Identification comes from variation in labor demand shocks to commuting destinations, as aggregated using insights from a quantitative spatial equilibrium model.

Couture, Victor, Cecile Gaubert, Jessie Handbury, and Erik Hurst. “Income Growth and the Distributional Effect of Urban Spatial Sorting.” The Review of Economic Studies, 91(2), 858-898.

DOI: 10.1093/restud/rdad048

Abstract

We explore the impact of rising incomes at the top of the distribution on spatial sorting patterns within large U.S. cities. We develop and quantify a spatial model of a city with heterogeneous agents and non-homothetic preferences for neighbourhoods with endogenous amenity quality. As the rich get richer, demand increases for the high-quality amenities available in downtown neighbourhoods. Rising demand drives up house prices and spurs the development of higher quality neighbourhoods downtown. This gentrification of downtowns makes poor incumbents worse off, as they are either displaced to the suburbs or pay higher rents for amenities that they do not value as much. We quantify the corresponding impact on well-being inequality. Through the lens of the quantified model, the change in the income distribution between 1990 and 2014 led to neighbourhood change and spatial resorting within urban areas that increased the welfare of richer households relative to that of poorer households, above and beyond rising nominal income inequality.

Evensen Charlotte B., Frode Steen, and Simen A Ulsaker. 2024. “Co-Location, Good, Bad, or Both: How Do New Entries of Discount Variety Stores Affect Local Grocery Business?” Journal of The European Economic Association, 22(4): 1798-1843.

DOI: 10.1093/jeea/jvad074

Abstract

We analyse 69 entries and relocations by the largest Norwegian discount variety chain Europris during the period 2016–2019, and measure how its location choices affect local grocery stores’ performance. We use detailed data from a major Norwegian grocery chain, which enables us to combine local grocery stores’ sales and traffic with travelling distance to new or relocated Europris stores, and a two-way fixed effects strategy. Our findings suggest that entries and relocations have significant effects and that the sign of the effect depends on the distance between the stores, creating a non-linear relationship between the effect of entry and the distance between the stores. Sufficiently close entries and relocations increase local demand since more customers are attracted to the market, but as the distance increases, the competitive effect of a new discount variety store dominates, and local grocery store sales and traffic are reduced. As we move further away, the entry effect is gradually reduced to zero.

Kreindler, Gabriel. 2024.“Peak-Hour Road Congestion Pricing: Experimental Evidence and Equilibrium Implications.” Econometrica, 92(4): 1233-1268.

DOI: 10.3982/ECTA18422

Abstract

Developing country megacities suffer from severe road traffic congestion, yet the level of congestion is not a direct measure of equilibrium inefficiency. I study the peak‐hour traffic congestion equilibrium in Bangalore. To measure travel preferences, I use a model of departure time choice to design a field experiment with congestion pricing policies and implement it using precise GPS data. Commuter responses in the experiment reveal moderate schedule inflexibility and a high value of time. I then show that in Bangalore, traffic density has a moderate and linear impact on travel delay. My policy simulations with endogenous congestion indicate that optimal congestion charges would lead to a small reduction in travel times, and small commuter welfare gains. This result is driven primarily by the shape of the congestion externality. Overall, these results suggest limited commuter welfare benefits from peak‐spreading traffic policies in cities like Bangalore.

Liu, Crocker H., Stuart S. Rosenthal, and William Strange. 2024. “Agglomeration Economies and the Built Environment: Evidence from Specialized Buildings and Anchor Tenants.” Journal of Urban Economics, 142: 103655.

DOI: 10.1016/j.jue.2024.103655

Abstract

Previous work on agglomeration economies ignores the built environment. This paper shows that the built environment matters, especially for commercial sectors that dominate city centers. Buildings are specialized beyond random assignment, in part because externality-generating anchor tenants skew a building's other tenants towards the anchor's industry. An anchor elsewhere on the blockface has a much weaker effect, and one that is weaker still if across the street, suggesting rapidly attenuating agglomeration economies. Attenuation is pronounced for retail and information-oriented office industries but is absent for manufacturing. Building managers have incentives and capacities to partly internalize local externalities, contributing to urban productivity.

Magontier, Pierre, Albert Solé-Ollé, and  Elisabet Viladecans-Marsal. 2024. “The Political Economy of Coastal Development.” Journal of Public Economics, 238: 105178.

DOI: 10.1016/j.jpubeco.2024.105178

Abstract

Coastal development has advantages, such as job creation, and drawbacks, such as the loss of environmental amenities, for both residents and non-residents. Local governments may prioritize their constituents’ interests, resulting in suboptimal coastal development. We investigate how political alignment among neighboring mayors facilitates intergovernmental cooperation in the development of coastal areas. We leverage causal effects by applying a close-elections Regression Discontinuity Design to the universe of buildings in Spain. Municipalities with party-aligned mayors develop 46% less land than politically isolated ones, and politically homogeneous coastal areas develop less than fragmented ones. The effect is more salient for land closest to shore or previously occupied by forests, in municipalities with a large share of protected land, and for relevant environmental markers, such as air and bathing water pollution. These results underscore the importance of cooperative political endeavors in managing development spillovers, with environmental considerations assuming a central role.

Miyauchi, Yuhei. 2024. “Matching and Agglomeration: Theory and Evidence from Japanese Firm-to-Firm Trade.” Econometrica, 92(6): 1869-1905.

DOI: 10.3982/ECTA19697

Abstract

This paper shows that matching frictions and a thick market externality in firm‐to‐firm trade shape the agglomeration of economic activity. Using panel data of firm‐to‐firm trade in Japan, I demonstrate that firms gradually match with alternative suppliers following an unanticipated supplier bankruptcy, and that the rate of rematching increases in the geographic density of alternative suppliers. Motivated by these empirical findings, I develop a general equilibrium model of firm‐to‐firm matching in input trade across space. The model reveals that the thick market externality gives rise to an agglomeration externality affecting regional production and welfare. Using the calibrated model to the reduced‐form patterns of firm‐to‐firm matching, I estimate that the elasticity of a region's real wage with respect to population density due to the thick market externality is approximately 0.02. This finding highlights the substantial impact of the thick market externality on the overall agglomeration benefit.

Oberfield, Ezra, Esteban Rossi-Hansberg, Pierre-Daniel Sarte, and Nicholas Trachter. 2024. “Plants in Space.” Journal of Political Economy, 132(3): 867-909.

DOI: 10.1086/726907

Abstract

To decide the number, size, and location of its plants, a firm balances the benefit of delivering goods from multiple plants with the cost of setting up and managing these plants and the potential for cannibalization among them. Modeling the decisions of heterogeneous firms in an economy with a vast number of distinct locations involves a large combinatorial problem. Using insights from discrete geometry, we study a tractable limit case of this problem in which these forces operate at a local level. Our analysis delivers predictions on sorting across space. Compared with less productive firms, productive firms place more plants in dense, high-rent locations and fewer plants in markets with low density and low rents. We present evidence consistent with these and several other predictions, using US establishment-level data.

Yabe, Takahiro, Bernardo García Bulle Bueno, Morgan R. Frank, Alex Pentland, and Esteban Moro. “Behaviour-Based Dependency Networks Between Places Shape Urban Economic Resilience.” Nuture Human Behaviour.

DOI: 10.1038/s41562-024-02072-7

Abstract

Disruptions, such as closures of businesses during pandemics, not only affect businesses and amenities directly but also influence how people move, spreading the impact to other businesses and increasing the overall economic shock. However, it is unclear how much businesses depend on each other during disruptions. Leveraging human mobility data and same-day visits in five US cities, we quantify dependencies between points of interest encompassing businesses, stores and amenities. We find that dependency networks computed from human mobility exhibit significantly higher rates of long-distance connections and biases towards specific pairs of point-of-interest categories. We show that using behaviour-based dependency relationships improves the predictability of business resilience during shocks by around 40% compared with distance-based models, and that neglecting behaviour-based dependencies can lead to underestimation of the spatial cascades of disruptions. Our findings underscore the importance of measuring complex relationships in patterns of human mobility to foster urban economic resilience to shocks.

Diego Puga is Professor of Economics at CEMFI, in Madrid, Spain.

His research interests include urban economics, economic geography and international trade. Born in Spain, where he completed his undergraduate degree in Economics, he obtained his Ph.D. in Economics from the London School of Economics in 1997. His publication include articles in American Economic Review, Econometrica, Quarterly Journal of Economics, and Review of Economic Studies, and have been cited over 6,000 times in articles included in Web of Science and over 21,000 times in Google Scholar.

Diego Puga's research has been funded by two Advanced Grants from the European Research Council and multiple grants from national funding bodies. In 2008 he received the Sabadell-Herrero Prize (awarded annually to a Spanish researcher under the age of 40 for outstanding contributions to economics or social sciences) and in 2020 the Rei Jaume I Prize in Economics for his contributions to spatial economics. He previously held academic positions at the London School of Economics, the University of Toronto, Universitat Pompeu Fabra, and imdea Social Sciences.

He is a member of Spain's Council of Economic Advisers and was part of the Multidisciplinary Workgroup providing advice and support to the Government of Spain on scientific matters related to covid-19 and its consequences.