«Here again I find Jacobs’s work highly suggestive. Her emphasis on the role of cities in economic growth stems from the observation that a city, economically, is like a nucleus of an atom: If we postulate only the usual list of economic forces, cities should fly apart. The theory of production contains nothing to hold a city together. A city is simply a collection of factors of production – capital, people and land – and land is always far cheaper outside cities than inside. Why don’t capital and people move outside, combining themselves with cheaper land and thereby increasing profits? Of course, people like to live near shopping and shops need to be located near their costumers, but circular considerations of this kind explain only shopping centers, not cities. Cities are centered on wholesale trade and primary producers, and a theory that accounts for their existence has to explain why these producers are apparently choosing high rather than low cost modes of operation. »

On the mechanics of economic development, R.E.Lucas