AØKK08355U  Seminar: Urban Economics

Volume 2017/2018

MSc programme in Economics

The seminar is primarily for students at the MSc of Economics


The purpose of this seminar is to give students an insight into the urban economics. Emphasis will be on presenting and discussing the basis urban economic analysis and its use in policy evaluation. The main themes which will be covered in the seminar are: agglomeration economies, analysis of urban spatial structure (commuting, housing production and population density), urban sprawl and land-use controls, hedonic price analysis, residential location choice and tenure choice, housing policies, urban distress (urban poverty and segregation), urban externalities (congestion, crime and pollution), cities and transport systems, and spatial labor markets (monopsony). These topics cover many of the important urban economic issues that have emerged in the academic literature over the past three decades. The focus will be on selected topics dealing with contemporary issues of urban policy such as pricing and regulation.

Learning Outcome
  • Agglomeration economies: why do cities exist? This is the fundamental question of urban economics. The answer to this question depends, at least partly, on the agglomeration economies and the scale economies. The agglomeration economies make larger urban areas (cities) more productive than small ones and the scale economies are known as “increasing returns to scale”. Urban economists have had a major effect on policy, and the trend toward city (de)regulation and many of the urban policies (e.g. land-use controls, rent controls and housing subsidy programs) and the abolitions of the place based policies are due to lessons from urban economics.
  • Spatial equilibrium in the Alonso-Muth-Mills model: The basic urban economic model is a monocentric city model. Essential assumptions in this model are that employment is constrained in one location, monetary commuting costs depend on distance, and workers may freely choose the optimal residence location. Furthermore, it is assumed that house prices are endogenous and workers are homogeneous in all aspects except for income. The seminar provides a mainstream treatment of urban spatial structure including demand for housing and commuting in a standard monocentric city model.
  • The static model and the Rosen-Roback framework: In the standard monocentric city model, the role of residential amenities is ignored, but these are clearly important. In the Rosen-Roback framework, the residential location choice, job location and commuting distance depends explicitly on the spatial distribution of residential urban amenities. The seminar offers a detailed analysis of the possible implication of spatial distribution of urban amenities. For example, suppose that all jobs and amenities are in city centres. This is likely a reasonable description for Denmark, where residential amenities and employment tend to be in, or close to, historic city centres. In this case, an increase in household income would induce households to move residence closer to city centres. Another example can be the analysis of urban externalities (e.g. congestion, crime and pollution).
  • Hedonic price analysis and the residential location choice: Property value hedonics is the workhorse model for valuation of local public goods and urban amenities. The hedonic price function describes a price equilibrium on a market for a heterogeneous commodity, without describing the underlying forces of demand and supply. Models of residential location choice (equilibrium sorting models) provide a structural description of the market which opens up the possibility for doping counterfactual (policy) analysis. The recent literature has demonstrated that household location choices are not only affected by the accessibility to employment opportunities but also by accessibility to urban amenities. The seminar provides an introduction to current practice in using hedonic price analysis and residential sorting models. The residential sorting models are useful for analyses of urban distress (e.g. urban poverty and segregation).
  • Transportation and land use in urban areas: The role that transportation plays in the spatial development of urban areas is of great interest. The focus here is on the question of where consumption or production occurs, instead of the question of how much to consume and produce. In order to answer this question, a monocentric theory of residential an employment location can be applied.


Ideas for papers:

  • Why cities exist?
  • Urban amenities and the housing prices.
  • Why is housing different?
  • Segregation – consequences or sources of education and crime?
  • The sources of agglomeration economies.
  • Wages, labour supply and commuting.
  • Why do firms cluster?
  • Congestion pricing and the urban structure.

Brueckner, J. K. 2011. Lectures on urban economics. The MIT Press, Cambridge, Massachusetts, London, England.

Glaeser, E. L. 2008. Cities, Agglomeration and Spatial Equilibrium. Oxford University Press.

O’Sullivan, A. 2012. Urban Economics, (eight edition). McGraw-Hill, Boston, USA..

The students should have an understanding of basics of microeconomics at the level of Hal R. Varian’s "Intermediate Microeconomics” or similar, and knowledge of econometrics at the level of Jeffrey Wooldridge’s “Introductory Econometrics” or similar.
Kick-off meeting, research and writing process of the seminar paper, sessions with presentation of own paper and critical evaluation/feedback to another student´s paper, actively participating in discussions at class.

Before the session a "so-finalized-as-possible"-draft of the paper must be uploaded in Absalon. After the presentations, the student submit an edited version of the paper in the Digital Exam portal as the final exam paper. The aim is that students use the presentation sessions as an opportunity to receive and use the constructive feedback to improve the paper.
Schedule: (suggestions)
• Kick-off meeting: February 7, 2018 15:00-17:00
• Extra days of teaching/supervision: weeks 7, 8, 14 and 16 (e.g. February 14 and 21, April 4 and 18)
• Deadline of commitment paper (uploaded in Absalon): March 1
• Presentations/Workshops: weeks 18, 19 and 20 (e.g. May 3, May 10 and May 17)
7,5 ECTS
Type of assessment
Written examination
- a seminar paper in English that meets the formal requirements for written papers stated in the curriculum and at KUNet for seminars.
Exam registration requirements

Attendance in all activities at the seminar as stated in the formal requrements in the Curriculum and at the  KUnet for seminars (UK) and Kunet for seminars (DK) is required to participate in the exam.


All aids allowed
Marking scale
7-point grading scale
Censorship form
External censorship
Exam period

Deadline for uploading the final seminar paper to DE: 1st of June 2018 before 10:00 AM


Exam information:

For enrolled students more information about examination, rules, exam schedule etc. is available at the intranet for  master students (UK) and  master students (DK)


The reexam is a written paper as stated in the  Master curriculum and at the KUnet for seminars for  master students (UK) and master students (DK). 


Exam information:

For enrolled students more information about re-examination, rules, re-exam schedule etc. is available at the intranet for  master students (UK) and  master students (DK)

Criteria for exam assesment

Students are assessed on the extent to which they master the learning outcome for the seminar and the objectives stated in the Curriculum.

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

  • Category
  • Hours
  • Seminar
  • 20
  • Project work
  • 186
  • Total
  • 206