GY210      Half Unit
The Economics of Cities

This information is for the 2022/23 session.

Teacher responsible

Prof Henry Overman


This course is compulsory on the BSc in Geography with Economics. This course is available on the BA in Geography, BSc in Economic History and Geography, BSc in Economics, BSc in Environment and Development and BSc in Environmental Policy with Economics. This course is available as an outside option to students on other programmes where regulations permit and to General Course students.

This course is capped at 80 students.


Economics A (EC100) or Economics B (EC102) or Microeconomics I (EC1A1 or EC1A3 or EC1A5) in combination with Macroeconomics I (EC1B1 or EC1B3 or EC1B5), and ST107 (or equivalent course in statistics) strongly recommended.

Course content

Urban economics is concerned with the spatial form of cities and the division of national economic activity into cities, both at a point in time and over time.  Three fundamental questions are: (1) Why are economic activities within a country so unequally distributed across space? (2) Why do cities (and more broadly agglomeration of firms and workers) emerge and in what locations? (3) Why are economic activities within cities unequally distributed in general and between areas near the city centre and those near or in the suburbs?

The main topics covered in this course include:

- Why do cities exist and why do firms cluster?

- What determines equilibrium city size and features of the urban system?

- City growth and spatial transformation

- Diseconomies in cities: Urban location, land rents and land use patterns

- The role of local governments


In the Department of Geography and Environment, teaching will be delivered through a combination of classes/seminars, pre-recorded lectures, live online lectures, in-person lectures and other supplementary interactive live activities.


This course is delivered through a combination of classes and lectures across Lent Term.


This course includes a reading week in Week 6 of Lent Term.

Formative coursework

Students will be expected to prepare for group discussion of some readings and hand in short essays or problem sets.

Indicative reading

  • O’Sullivan. A., Urban Economics. Boston: Irwin- McGraw-Hill, 2012.
  • Greenstone M. R. Hornbeck & E. Moretti (2010). Identifying agglomeration economies: Evidence from winners and losers of large plant openings, Journal of Political Economy, Vol. 118, No. 3, 536-598.
  • Duranton, G. & Puga, D. (2001). Nursery cities: Urban diversity, process innovation, and the life cycle of products. American Economic Review, 91(5).
  • Ahlfeldt, G. M., & McMillen, D. P. (2018). Tall buildings and land values: Height and construction cost elasticities in Chicago, 1870–2010. Review of Economics and Statistics, 100(5), 861-875.
  • Hilber, C. A., & Vermeulen, W. (2016). The impact of supply constraints on house prices in England. The Economic Journal, 126(591), 358-405.
  • Hilber, C.A.L. & Lyytikäinen, T. (2017). Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market? Journal of Urban Economics 101, 57-73.


Exam (100%, duration: 2 hours) in the summer exam period.

Student performance results

(2019/20 - 2021/22 combined)

Classification % of students
First 55.5
2:1 33.5
2:2 7.7
Third 0.6
Fail 2.6

Key facts

Department: Geography and Environment

Total students 2021/22: 88

Average class size 2021/22: 15

Capped 2021/22: No

Lecture capture used 2021/22: Yes (LT)

Value: Half Unit

Guidelines for interpreting course guide information

Course selection videos

Some departments have produced short videos to introduce their courses. Please refer to the course selection videos index page for further information.

Personal development skills

  • Problem solving
  • Application of information skills
  • Communication
  • Application of numeracy skills