10. Land for Industry in a Multi-industry Ribbon Town

In this chapter, land use for multi-industry production is considered. The diagrammatic solution from Chap. 9 is extended to incorporate land for production. In this chapter, I envisage equilibrium in up to six markets: a market for each of two export industries and an ancillary industry, a single market for retail goods within the city, a single market for residential and industrial land within the city, and a single market for labor inside and outside the city. In urban economics, there is a longstanding practice of imagining that industries each have a bid rent curve (bid rents that decline with distance from the city center) and that these bid rent curves then determine the allocation of land among commercial land uses. Industries there are seen to be decentralized simply because they have a relatively flat bid rent curve. Although this chapter is also based on bid rent curves, my approach is different in several respects. First, I distinguish between industries that export and industries that do not. Presumably, it is industries that export that put a high value on access to the geographic point of export (Point O). Second, to me, firms decentralize where the cost of commuting is high relative to the cost of shipping goods. Third, when firms centralize, they separate themselves geographically from their workers; when firms decentralize, they do not. Fourth, competition in the market for residential land ensures that only one export industry can be centralized. The central conclusion of this chapter is that we need to focus not on the bid rent curves of industries, but the bid rent curves of their workers. Without accommodation of their workers, there can be no production by the industry. This insight allows for an understanding of the outcomes of the model that would otherwise be daunting.