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The Economics of Urban Sprawl: Theory and Evidence on the Spatial Sizes of Cities

The Review of Economics and Statistics 1983 65(3), 479
Many commentators believe that the phenomenon of urban sprawl, which is characterized by vigorous spatial expansion of urban areas, is a symptom of an economic system gone awry. By transforming pastoral farmland into often-unattractive suburbs, sprawl is thought to disrupt a natural balance between urban and non-urban land uses, leading to a deplorable degradation of the landscape.' This sentiment is often translated into policy through zoning restrictions designed to inhibit the conversion of land from agricultural to urban use (see Bryant and Conklin (1975)). The economist's view of urban expansion stands in stark contrast to this emotionally-charged indictment of sprawl. Economists believe that urban spatial size is determined by an orderly market process which correctly allocates land between urban and agricultural uses. The model underlying this view, which was originally developed by Muth (1969) and Mills (1972) and more completely analyzed by Wheaton (1974), suggests that urban spatial size is determined in a straightforward way by a number of exogenous variables. By showing empirically that urban size is related to the given variables (population, income, agricultural rent, and commuting cost) in the manner predicted by the model, the present paper achieves two goals. First, the empirical results suggest that the economist's view of urban sprawl is justified: rather than being determined by a process which indiscriminately consumes agricultural land, urban sizes are the result of an orderly market equilibrium where competing claims to the land are appropriately balanced.2 Second, by confirming the urban size predictions of the underlying model, the empirical results constitute yet another piece of evidence validating the basic framework of urban economic analysis.3 The plan of the paper is as follows. Section II sketches the structure of the Muth-Mills model and presents the main comparative static results relevant to urban sprawl. With the model's predictions in focus, section III discusses the sample and the data, and section IV presents the empirical results. Section V offers conclusions.