> Urban areas are more efficient for almost all resources.
People say this all the time. If it's true, why is the cost of living in an urban area almost always higher than in a rural area?
People say this all the time. If it's true, why is the cost of living in an urban area almost always higher than in a rural area?
Worse, you are likely looking at the costs of single family home purchasing, without considering cost of upkeep and transportation. Not to mention efficiency of getting work done.
That is all to say, because it is complicated. Scale fundamentally makes things hard to reason about. And cost discussions typically micro optimize a single factor.
It is not precisely the same concept as cheap, but I think you are mistaken about efficiency. Economic efficiency means that goods are produced at the lowest possible average total cost.
https://en.wikipedia.org/wiki/Economic_efficiency https://en.wikipedia.org/wiki/Average_cost
A wide range of economic goods have a lower average cost in rural areas. Anything from a 5 bedroom house to a case of Bud Light.
Urban areas are inefficient for most goods. They are popular not because of their general efficiency, but because they have better-paying jobs.
Consider, I can literally walk to the grocery to buy beer. I suppose I have to replace my shoes from wear, but no upkeep or gas on my car. No miles of road that need maintenance to subsidize my trip to the store.
Now, yes, there are miles of road to subsidize getting the store supplied. But that is shared for all people supplied by the store. Same is true, of course, for the trips to the store, but again, my side of that equation is zero. Which is all part of what makes me argue it is more efficient.
And again, complicated with general scale making most observations necessarily simplistic.
Artificial scarcity
Some of it is alleviated by hub and spoke transport plus extra parking places, but not all. At some point, transport costs split the city into a conurbation, even without the sprawl, you end up with towns linked by capacious public transportation and roads. Or terrible congestion.
There are limits to density after all. Even with walking and bikes and underground and tramways and double decker busses.
and the extreme prices are just a natural byproduct of supply/demand.
why are salaries higher? because the labor pools in high density urban areas have, in some sectors, a more highly developed set of skills and capabilities than the comparable labor pools in other areas have (e.g. Wall Street bankers and quants, NYC chefs and restaurant workers, SV programmers and capital managers, San Diego life sciences and biotech, etc). IOW, agglomeration economies.
Why would someone pay for convenience? Probably because it's the only affordable way to buy more time. You could pay someone to do your errands for you while you commute. You could fly a helicopter to work everyday instead of driving. Those things are way more expensive than just living in a smaller apartment closer to everything, though. That is what sets the upper bound on how much profit can be extracted from real-estate. If teleportation existed, I'm guessing a lot of urban landlords would lose a lot of money. But it doesn't.
Meanwhile, the suburbs are intrinsically less efficient, but subsidized from the urban revenues. Think about the laws that require phone companies to provide service to rural areas, or the USPS to deliver mail to rural areas, or your taxes buying roads to those rural areas. You, the city dweller, are paying for all of those things.
The TL;DR is that efficiency is not related to the price you pay to live somewhere. It's much more complicated.
There are a large number of Suburban areas now, that began as smaller towns and cities grew into and filled the gaps between. Those primarily existed as local concentration points to facilitate rural infrastructure at one time.
* It is not as time sensitive - you can interleave and batch delivery hours. People work hours, unfortunately not yet.
* You can use big transport rail for longer distance or big trucks. This increases density vastly. People need some space, crates don't.