How to Value an Urban Network

Abstract

This article develops a simple model of an urban network by combining a graph-theoretic approach with basic micro-economic theory. Use value of the urban network is defined by total rents earned by economically independent rent-charging node-owners. In the equilibrium, the economic rent in the urban network is the dominant factor affecting the size and the core-periphery composition of the spatial economy. The marginal cost of transportation and production, and hence, location rents and producer profits, are weaker determinants of the spatial economy that are significant only in smaller economies and mostly vanish in larger ones.

Keywords: economic network, node-rent, core-periphery, city size

JEL Classification: R12, L14, D2