A Perfect Circle: Can the Shape of a City Affect Its Success?

Wharton professor of real estate, Mariaflavia Harari writes in Knowlede @ Wharton about her research into the influence of the shape of a city on the economic success of residents and businesses. "My research question was what influence, if any, does a city’s shape have on the location choices of consumers and firms? Do consumers and firms benefit in terms of welfare or productivity from locating in cities with particular shapes?"

Harari’s research has made some interesting linkages between the shape of the city and average local wages and housing rents. More compact cities tend to have higher wages and rent, with circular cities being the most ideal for reducing commute times and improving efficiencies. However, since no city can be a perfect circle, Harari looks at the consequences of natural geography on a city.

…I’m not simply making a crude comparison between compact and non-compact cities in my analysis. I look at what happens when a given city becomes less compact as a result of hitting some topographic obstacle, like a mountain or a lake, as it expands in space. What I find is that when a city ends up with a worse geometry because of hitting some geographic constraints, its population growth slows down, and housing rents and local wages tend to decrease.

Harari writes that her research can have an impact, particularly in India, where growing cities are sprawling outward due to restrictions on building heights that limit opportunities for compact development that could lead to better efficiencies.