Economics 312

Urban Land Economics

Introduction
Martin Farnham
University of Victoria
Fall 2009

Course logistics
Professor:

Martin Farnham
mfarnham@uvic.ca
BEC 354
Office Hours: Tuesdays 1:00-2:30
or by appointment

TA:

Daniel Sharratt
dsharratt@uvic.ca
Office Hours: Wednesdays 1:00-2:00pm
location TBA
Econ 312--Farnham

Course logistics (cont)

Evaluation
Midterm 1, 25% (Oct 6, in class)
Midterm 2, 25% (Nov 6, in class)
Final Exam 50% (details TBA)

Text: OSullivan Urban Economics 7th Ed

Assignments
Ungraded problem sets
Readings from text or elsewhere
Econ 312--Farnham

Course logistics (cont)

Attendance
If you dont sign the attendance sheet in the first
three lectures, automatically dropped (else notify
me of intent to stay in course)
Technically attendance not required; however,
strongly recommended.
You are responsible for anything you miss; if you
miss a lecture ask someone else what you missed
Lecture notes posted on Blackboard, but not
necessarily complete
https://blackboard.uvic.ca/webct/
logonDisplay.dowebct
Econ 312--Farnham

Course logistics (cont)

Office hours
Use them!!

Learning in this course

Do readings
Keep good notes
MOST importantly, do problem sets carefully and
thoroughly
Think!

See course outline for additional details

Econ 312--Farnham

A note on email etiquette

Please dont email me about
Information available elsewhere (course website,
course outline, etc.)
What you missed if you skipped a lecture
Whats going to be on an exam
Things you could ask me in office hours
I reserve the right to ignore emails that I deem
inappropriate

Please use the standard letter format

Sign your email
Dont use text message abbreviations (I wont
understand them!)
Econ 312--Farnham

What is this course about?

Cities are centers of innovation, learning, and
culture and are exciting places to live
Economics tends to ignore spatial aspects of
production
Urban economics studies location choices
and considers why economic activity is
concentrated in certain locations.
Addresses a number of questions
Econ 312--Farnham

Questions addressed by
Urban Economics
Why do cities form and what determines
their location, size and structure?
What are the causes of urban growth
and decline and is there a role for
policy?
What determines the price of land?
What effect does the price of land have on
other markets (e.g. financial markets!)

What drives neighborhood segregation?

Econ 312--Farnham

Questions addressed by
Urban Economics (cont)
What is the motivation for zoning and landuse restrictions?
What causes traffic congestion and what can
be done to alleviate it?
Why are crime and poverty concentrated in
cities?
Why is housing different from other goods?
What is the role of local governments in urban
and housing policy?
Econ 312--Farnham

Review of Microeconomics
Reading for Micro Review
Your principles of micro text and/or notes
OSullivan appendix (starts p367)
Analyzing market outcomes in urban settings with an interest
in policy that will correct market failures when such failures
occur
Primary questions throughout:
To what outcomes do markets lead?
Under what circumstances are these outcomes desirable?
If markets outcomes are undesirable, what would be the
desirable outcome? What is the correct policy response?
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Review of Microeconomics
Analyzing what happens involves positive analysis
Terms desirable and undesirable imply we are also interested in
normative analysis.
Positive analysis involves asking what an outcome will be under
certain circumstances:
Ex: in equilibrium, how far will people commute to work?
Normative analysis involves asking questions about what
outcomes we would like to see. (what should be)
Ex: what is the right (socially optimal) distance from home to
work?
Points to the need for a normative criterion by which to judge
outcomes as good or bad.

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Review of Microeconomics
Normative criterion we use in economics is typically that of
economic efficiency.
Important to keep in mind that economic efficiency
has utilitarianism as its philosophical base
says nothing (much) about fairness or equity
is only one of many criteria that we can (should?) use to
judge market outcomes.
With these caveats in mind, in this class we will (usually) judge
outcomes in terms of whether or not they are economically
efficient.
Normative statements like outcome X should happen
should be read as shorthand for outcome X should happen
if we are using economic efficiency as the sole criterion for
decision-making.
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Review of Microeconomics

Economic efficiency defined:

An outcome is efficient if it maximizes net benefits, where net

benefits are equal to total benefits minus total costs.

Tells us that, at its core, the analysis of economic efficiency is

simply cost-benefit analysis.

We will be analyzing efficiency in a variety of contexts, such as:

1. What is the efficient level of provision of a public service?
Ex: what is the efficient level of policing?
3. Should we undertake a particular project (binary decisionmaking)?
Ex: should Victoria build a light-rail transit system?
5. How should we allocate a scarce resource across competing
uses?
Ex: how much land on the Saanich Peninsula should be used
for residential building vs. agriculture vs. public parks? 13

Review of Microeconomics

We will focus on answering questions such as these by using costbenefit analysis to identify the outcomes that make net benefits as
large as possible.

Important point: we need to make sure we have correctly identified

and measured all of the costs and benefits associated with a given
activity/outcome.

An alternative characterization of efficiency (that we may pick up on

at various points throughout the term):
An outcome is efficient if it is impossible to come up with an
alternative outcome in which at least one person can be made
better off without any one person being made worse off.

Although it may not be immediately obvious, we will see that this

characterization of efficiency will be satisfied if net benefits are
maximized.
Econ 312--Farnham

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Review of Microeconomics

In order to answer normative questions such as those posed

above, we first need to understand how to answer positive
questions.

For instance, we need to understand what market outcomes

look like, in order to work out whether they are desirable
(efficient).

This means we need to recall some basic ideas we learned in

principles of microeconomics.

Specifically, we want to understand:

1. How consumers decide what goods to buy (demand).
2. How producers decide what goods to produce (supply).
3. How markets bring producers and consumers together
(equilibrium).

Once we understand this, we can assess whether consumers and

producers act in such a way as to achieve an economically efficient
Econ 312--Farnham
15
outcome.

Review of Microeconomics
1.

Review of Demand.

Three areas to cover on the demand side:

i. Interpreting an individual consumers demand curve
ii. Measuring consumer well-being using the demand curve
iii. Deriving aggregate demand from individual demand

Econ 312--Farnham

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Review of Microeconomics: Demand

i.

Interpreting an individuals demand curve

Recall that a demand curve maps out a relationship between price

and quantity.
Demand curves usually slope downwards:
Price (P)
known as the law of demand

Demand
Curve (D)

Remember, on the horizontal axis we are

measuring units of the good consumed (Q),
while on the vertical axis we are
measuring the price per unit (P),
in some form of currency (dollars,
Quantity (Q) cents etc)

How to interpret this demand curve?

Two interpretations, each of which will be useful, depending on
the context.
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Review of Microeconomics: Demand

The first interpretation of the demand curve is probably the most

familiar to you:
P

Interpretation 1: the D curve tells us how many units

of a good a consumer wishes to buy in total, at a
given price per unit for the good.

For instance, the D curve tells us that if

the price per unit is P1, then the
consumer would like to buy Q1 units.
etc.

P1
P2

Q1

Q2

We can think of this interpretation as reading the D curve horizontally:

that is, if we plug in values for P, we get out values for Q.
Econ 312--Farnham

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Review of Microeconomics: Demand

The second interpretation of the demand curve may be less familiar

to you:
P

Interpretation 2: the height of the D curve at any

given point tells us how the consumer values
additional units of the good.

P1
P2

Q1

Q2

For instance, the D curve tells us that if

the consumer currently has Q1 units of
the good, then a small increase in
quantity would be worth P1 per unit to
the consumer. etc.

We can think of this interpretation as reading the D curve vertically:

that is, if we plug in values for Q,
we get out values for P.
We will elaborate on this interpretation by use of an example. 19

Review of Microeconomics: Demand

Example: Suppose that demand is given by Q = 5 - (1/2)P.
From the D function, if P=$10, Q=0 will be demanded.

P($)

But if P = $8, Q = 1 will be demanded.

10

consumers maximum willingness to pay for the

first unit is greater than $8, but less than $10.

D
1

Area of the rectangle ($10) thus gives an

upper bound on consumers willingness to
pay for the first unit.

So we know that the maximum willingness to pay for the first

unit is something less than $10. Can we do better than this?
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Review of Microeconomics: Demand

Now consider smaller changes in P. Say P from $10 to $9 so

that Q from 0 to 0.5.

Consumer did not buy the first half unit when it cost $5, but
does when it costs $4.50.
P($)
consumers maximum willingness to pay for this first
10
half unit is something less than $5.
9

D
0.5 1

Now suppose P from $9 to $8, so that total Q

from 0.5 to 1.
Consumer did not buy the second half unit
when it cost $4.50, but does when P falls.
5

consumers maximum willingness to pay for this second

half unit is something less than $4.50.
This tells us that the consumers maximum willingness to
pay for the first unit is in fact something less than $9.50 (as
Econ 312--Farnham
opposed to $10).

21

Review of Microeconomics: Demand

We could consider even smaller changes in prices and quantities.
For instance we could now lower the price in $0.50
increments, rather than in $1.00 increments.
P($)

Doing this allows us to see that the

consumers maximum willingness to pay for
the first unit is something less than $9.25.

10
9
8

D
0.5 1

In the limit, as we consider smaller and

smaller price changes, what we are doing
here is calculating the area under the
demand curve between Q=0 and Q=1.

This area tells us the exact maximum willingness to pay by

this consumer for the first unit of the good.
In this case, the area of that trapezoid is equal to $9.
The consumer is willing to pay at most $9 for the first unit.

22

Review of Microeconomics: Demand

By the same logic, the area under the demand curve as we
increase Q from 1 to 2 units tells us the maximum willingness to
pay for the second unit.
In this case, that area equals $7.
P($)
Indeed, the area under a D curve between any two
10
quantities tells us the maximum willingness to pay
8
for that additional quantity.
6

If we consider very small increases in

quantity, than the trapezoid representing the
willingness to pay has a very small base.
1

In the limit, as we consider tiny tiny increases in Q, the base

of the trapezoid goes to zero, and the willingness to pay (per
unit) for these tiny tiny increases in Q is just equal to the
height of the demand curve.
Econ 312--Farnham

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Review of Microeconomics: Demand

This is the logic behind the second interpretation of the demand
curve, that the height at any point tells us how consumers value
small Q.
As we have seen, this is equivalent to telling us
P($)
how much the consumer is willing to pay for
small Q.
We can also think about this as telling us how
much additional benefit a consumer would get
from a small Q.
Q

When we are thinking about the D curve in

this way, we will refer to it variously as the:

1. Marginal Value (MV) curve

2. Marginal Willingness to Pay (MWP) curve
3. Marginal Benefit (MB) curve
Econ 312--Farnham

Note that
these terms
are equivalent!
24

Review of Microeconomics: Demand

ii.

Measuring consumer well-being using the demand curve.

1st interpretation of D curve: tells us Q demanded at a given P.

2nd interpretation of D curve: area under the D curve measures
consumers willingness to pay for Q1 units.

P($)

But, how much did consumer actually have to pay for Q1?
A

Expenditure (price times quantity) given by area P1Q1.

P1

consumer willing to pay more than she has to pay.

Q1

Difference between willingness to pay and

expenditure measures consumer well-being.

Definition: consumer surplus (CS) = what a consumer is willing to

pay minus what they have to pay.
In the diagram above, the CS from buying Q1 units at P1 per unit is
equal to the triangle A.
Econ 312--Farnham
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Topic 1(b): Review of Consumer Theory

iii.

Deriving aggregate demand from individual demand

Suppose two individuals - A and B - each with D curves drawn below.

P

P
DA

Aggregate D

DB

P1
P2
QA1

QA2

QA

QB
QB1

QB2

QA1+QB1

QA2+QB2

At P1, A demands Q1A and B demands Q1B.

Aggregate demand at P1 therefore equals Q1A + Q1B.
At P2, A demands Q2A, B demands Q2B, and agg. D = Q2A + Q2B.
We are horizontally aggregating individual demands to get
aggregate demand.
Econ 312--Farnham

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Topic 1: Introduction and Review

1.

Review of Supply.

Three areas to cover on the supply side:

i. Interpreting an individual producers supply curve
ii. Measuring producer well-being using the supply curve
iii. Deriving aggregate supply from individual supply

Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

i.

Interpreting a firms supply curve

Recall that a supply curve maps out a relationship between price

and quantity.
Supply curves usually slope upwards: known
Price (P)
as the law of supply

Supply
Curve (S)

NB: Throughout this class we will only

be looking at the supply behavior of
competitive firms.
i.e., firms that take the prices of
output and inputs as given.
Quantity (Q)

How to interpret this supply curve?

Like D curve, there are two interpretations of the S curve.
Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

The first interpretation of the supply curve is (again) probably most

familiar:
Interpretation 1: S curve tells us how
many units of a good a producer wishes
to sell in total, at a given price per unit
for the good.
S

P1

If the price per unit is P1, then the firm

would like to sell Q1 units. etc, etc.
Q1

We can think of this interpretation as reading the S curve horizontally:

that is, if we plug in values for P,
we get out values for Q.
Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

The second interpretation of the supply curve should also be

(relatively) familiar:
Interpretation 2: the height of the S curve at any
given point tells us how much additional units of the
good cost to produce.
S

P1

Q1

i.e., the supply curve is also a Marginal Cost

(MC) curve.
If the firm is currently producing Q1
units of the good, then a small
increase in quantity would cost P1 per
unit to produce.
Q

We can think of this interpretation as reading the S curve vertically:

that is, if we plug in values for Q,
we get out values for P.
Again, useful to work through an example.

Topic 1: Introduction and Review: Supply

Example: Suppose that supply is given by Q = P - 5.
From the S function, if P=$5, Q=0 will be supplied.
But if P = $6, Q = 1 will be supplied.

P($)

firms cost of supplying that first unit

(the MC of that unit) is somewhere
between $5 and $6.

S
7
6

$12

$5.50 $6.50
1

Turns out that the exact cost of producing this

first unit = area under the S curve between
Q=0 and Q=1.

And area under S curve from Q=1 to Q=2 equals cost of producing
2nd unit.
And area under S curve from Q=0 to Q=2 tells us how much the
firms costs increase going from Q=0 to Q=2.
Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

Area under S curve up to a given Q actually tells us the Variable

Cost (VC) of producing that Q.

Recall that a firms Total Costs (TC) have 2 components:

TC = Fixed Costs + Variable Costs
= FC + VC.

By definition, FC dont change as Q changes, while VC do.

So MC = TC/Q = (FC+VC) /Q = VC /Q.

area under the S curve up to a given Q = MC of 1st unit + MC
of 2nd unit + MC of third unit etc. etc.

And adding up MCs is the same as calculating VC.

Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

ii.

Measuring producer well-being using the supply curve.

1st interpretation of S curve: tells us Q supplied at a given P.

2nd interpretation of S curve: area under S curve
measures VC of producing Q1 units.

P($)

If producer sells Q1 units at P1 per unit, then Total

Revenue (TR) received = area of rectangle P1Q1.

P1

producer receives revenue greater than VC.

Q1

Difference between TR and VC provides a

measure of producer well-being.

Definition: producer surplus (PS) = TR - VC.

In the diagram above, the PS from selling Q1 units at P1 per unit is
equal to the triangle A.
Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

ii.

Measuring producer well-being using the supply curve.

More common measure of producer well-being is profit ().
What is the relationship between PS and ?
Recall:
PS = TR - VC; and
= TR - TC
= TR - VC - FC
PS

= PS - FC
or PS = + FC.
Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

Recall that CS measures the NB to consumers from consuming.

Similarly, we can think about PS as telling us about the NB to

producers from producing.

That is, tells us how much better off the firm is by choosing Q>0.

If Q = 0, TR=0 and TC=FC.

= -FC.

as Q =
PS as Q

If Q>0, TR>0 and TC=FC+VC.

= PS - FC.

Tells us that maximizing is equivalent to maximizing PS.

So even though is the true measure of firm well-being, we can

use PS instead.

Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

iii.

Deriving aggregate supply from individual firm supply

Suppose two firms - A and B - each with S curves drawn below.

P
SA

Aggregate S

SB
P1
P2
QA2

QA1

QA

QB2

QB1

QB
QA2+QB2

QA1+QB1

At P1, A supplies QA1 and B supplies QB1.

Aggregate supply at P1 therefore equals QA1 + QB1.
At P2, A supplies QA2, B supplies QB2, and agg. S = QA2 + QB2.
We are horizontally aggregating individual firm supplies to get
aggregate supply.
Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

iii.

Deriving aggregate supply from individual firm supply

Example: suppose identical supplies given by Q = 1/2P.

P

Aggregate S

SB

SA
4

QA

QB

QA +QB

At P = 0, each supplies 0 units. So agg. S = 0.

At P = 4, each supplies 2 units. So agg. S = 4.
etc.
In fact, agg. S = QA + QB at any P
so agg. S = 1/2P + 1/2P = P.
Econ 312--Farnham

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Topic 1: Introduction and Review: Supply

Exercise: For each of the following individual firm supplies, derive
an expression for aggregate supply. Draw a diagram illustrating
aggregate supply.
a) QA = P, QB = P
b) QA = P, QB = 2P
c) QA = P, QB = 4 - P.
Hint: be very careful if individual S curves have different
vertical intercepts.
Not just a case of adding the equations together.

Econ 312--Farnham

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Topic 1: Introduction and Review

Final topic in Intro/Review: Equilibrium.

Bringing both sides of the market together.

Definition of equilibrium:
a state of balance or rest;
a state where there is no tendency for change.

In our supply and demand model, an equilibrium is where:

1. Consumers are choosing the Q that makes them happiest,
given P. (Consumers choose Q to set MB=P)
i.e., maximizing CS.
2. Producers are choosing the Q that makes them happiest,
given P. (Producers choose Q to set MC=P)
i.e., maximizing PS.
3. Prices are such that consumer and producer behavior are
consistent.
Usually means supply equals demand. (Qs=Qd)
Econ 312--Farnham

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Topic 1: Introduction and Review: Equilibrium

Example: take the S and D curves illustrated below

At price P1,
consumers want to buy Q1 units,
producers want to sell Q1 units
consumer and producer behavior
is consistent.

P
S
A
P1
B
D
Q1

If P > P1, S > D and there would

be pressure on P to fall.

At equilibrium of P1 and Q1,

NB to consumers = CS = area A and
NB to producers = PS = area B.

Agg NB = CS + PS
=A+B

Note that area A is aggregate CS and area B is aggregate PS.

That is, CS is sum of all individual consumers CS and PS is sum of
all individual producers PS.
Econ 312--Farnham
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Topic 1: Introduction and Review: Equilibrium

One very important thing to note: aggregate NB always the same

if Q the same, no matter what happens to P.

Another way of saying this is that aggregate NB function only of

total Q, while the distribution of NB depends on P.
P
P2
P1
P3

Example: here equilibrium would be P1, Q1.

S

A
B

But, if government imposes a quota at Q2,

new equilibrium would be at P2, Q2 where:

C
D

D
Q2

Q1

Agg NB = CS + PS
CS = A
=A+B+C+D
PS = B + C + D

But now suppose that (instead of quota), government instead

says P cannot rise above P3 (price ceiling).
Equilibrium still Q2 but with different P. Now we have:
CS = A + B + C Agg NB = A + B + C + D
PS = D
Same in total, distribution different.

Summary:

Topic 1: Introduction and Review

We have seen that (absent quotas, price ceilings etc):

Consumers choose Q such that P = MB
i.e., choose to consume where P cuts D curve.
NB to consumers = CS.
Producers choose Q such that P = MC
i.e. choose to produce where P line cuts S curve.
NB to producers = PS.
Producer and consumer decisions are such that S=D
Aggregate NB = sum of individual NB
Sum of individual NB = CS + PS (if consumers and
producers are the the only agents affected by the market).

Note that these are positive questions - describing the way in

which markets DO work.

Can also ask corresponding normative questions.

Econ 312--Farnham

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Topic 1: Introduction and Review

Normative questions of interest are:

1.

What quantity of goods should be produced?

We know that in equilibrium Q is where S=D.

Under what circumstances is this the right Q in total (the one

that maximizes NB)?

2.

Which firms should produce these goods?

We know that in equilibrium each firm produces until P=MC.

Under what circumstances is the the right Q for each firm (the
one that minimizes aggregate production costs)?

3.

Which consumers should get to consume these goods?

We know that in equilibrium each consumer chooses Q such

that P=MB.

Under what circumstances is the the right Q for each

consumer (the one that maximizes aggregate benefits from
consumption)?
Econ 312--Farnham

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Topic 1: Introduction and Review

We will focus primarily on question (1). The efficient allocation will

occur (in all cases discussed in this course) where MC=MB.

Try to understand the intuition for this:

If MC>MB, this tells us the last little bit produced cost more to produce that
it gave to consumers in added benefit. Society would be better off with
less of the good (Q should fall).
If MC<MB, this tells us the last little bit produced cost less to produce that
it gave to consumers in added benefit. This suggest that increasing output
would raise overall well-being in society (Q should rise).
If MC=MB, this tells us the last little bit produced cost exactly the same
amount to produce as it gave consumers in added benefit. This tells us
this unit made society no better off than it was before (nor any worse off).
This is the efficient point.

Note that MC=MB in the equilibrium diagram 4 slides back. In a wellfunctioning market, MC=MB at equilibrium so that the equilibrium is
efficient. However, this does not always have to be the case!

When market failure occurs (due to something like the presence of an

externality or due to monopolistic control of an industry), it may not be the
case that MC=MB at equilibrium
In such a case, the equilibrium quantity may be different from the efficient
Econ 312--Farnham
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quantity.

Brief History of Western Urbanization

First cities formed in fertile crescent
(Mesopotamia) around 3000 BC
Followed agricultural breakthroughs
Domestication of grain
Development of irrigation
Invention of the plow

These breakthroughs created agricultural

surplus which allowed some to move into
cities and become craftsmakers
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First Cities
Early cities thought to have served defensive and
religious purposes
Food surplus required storage; centralized locations (scale
economies) easier/cheaper to defend
Rise of large-scale religion coincides with rise of cities
Perhaps cities resulted from economies of scale in worship
(large centralized temples, etc.)
Possible, however, that large-scale religion arose due to
increased population density (reverse causality)

Econ 312--Farnham

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First Cities (cont)

Economies of scope?
Defended temples made for convenient grain
storage site, or vice versa

Rise of cities led to rise in military conflict

Increasing religious wars
Wealth accumulation made for tempting targets
On the other hand, defense of cities easier than
defense of dispersed sites.

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Greek and Roman Cities

Athens, 500 BC, was trading city with
population of 150,000
Traded crafts and processed foods with
established farm and extracting colonies
Developed money
Assessed taxes on colonies to support city
Declined after war with Sparta
Econ 312--Farnham

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Greek and Roman Cities (cont)

Rome, 300 A.D., had population of 1
million
Established colonies throughout Europe
Fed itself from combination of trade and
taxation
Heavy reliance on tributes made it
susceptible to uprisings by colonies
(barbarians)
Econ 312--Farnham

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Feudal Cities
Society was structured around manors with land
worked by serfs
Small towns housed craftsmakers, exchanged crafts
for local farm surplus
London in 1000 (a trading city) had population of only
16,000
Decentralized power of dispersed manors meant
trade, not tribute, was source of income for
cities==>competition, innovation

Econ 312--Farnham

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Mercantile Cities
Military advances led to consolidation of power in
Europe starting in 15th cent.
Rise of professional armies
Advances in siege technology

Economies of scale in defense made large cities

more sensible
Consolidation led to larger trading areas
Rise of long-distance trade (with New World and
within Old World) contributed to rise of large trading
centers
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The Rise of Industrial Cities

Industrial revolution began shift from
rural economy, to industrial economy
3% of worlds population lived in cities in
early 1800s; 39% by 1970; more than 50%
now.
Driven by innovations in agriculture,
manufacturing, transportation, construction

Agricultural innovations==>increased
demand for manufactured
goods
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Industrial Revolution (cont)

Manufacturing innovations==> Increased
scale economies in production
Production moved from home to factory as relative
cost of production in factories fell, relative wage
rose

Transport innovations==> Larger markets,

greater specialization, greater productivity
Resulting increase in income caused greater
demand for output overall

Econ 312--Farnham

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Industrial Revolution (cont)

Construction innovations==>higher
density living
Increased population potential of cities by
reducing commuting costs
Steel construction and elevators were key
to achieving height in buildings

Econ 312--Farnham

54

Urbanization in Canada
Canadas economy originally based on
farming and resource extraction
Trading cities important
Atlantic ports: Halifax, St. John
St. Lawrence Seaway ports: Montreal,
Quebec City, Toronto

In 1867 majority of Canadian workers

worked in agriculture/resources
Econ 312--Farnham

55

Urbanization in Canada (cont)

Masseys reaper and mower example of
agricultural innovation, mass-produced
in Toronto
Railroads critical to urbanization
1860s, Quebec City and Toronto both had
about 60,000 residents
One got railroads in 1860s, one didnt
Montreal also got railroad
Econ 312--Farnham

56

Urbanization in Canada
In 1800, approximately 15% of
European North America lived in cities
(vs. 20% in Europe)
By 2001 2/3 of Canadas population
lived in 27 Census Metropolitan Areas
(CMAs)
By 2001, 80% lived in clusters of 10,000
or more population
Econ 312--Farnham

57

Some Current Issues in Canadian

Urbanization

Rapid growth
Sprawl/congestion
Affordable housing
Increasing fiscal difficulties
Revenue growth to municipal governments
has risen much more slowly than to
Federal and Provincial governments
Cities want bigger piece of fiscal pie
Econ 312--Farnham

58