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credibility and researchability. To say that urbanization is the result of localized external economies
carries more than a hint of Molière's doctor, who explained that opium induces sleep thanks to its
dormitive properties. Or as a sarcastic physicist remarked to an economist at one inter-disciplinary
meeting, "So what you're saying is that firms agglomerate because of agglomeration effects." Moreover,
the pure-externality assumption puts these effects into a kind of black box, where nothing more can be
said. Oh, you can try to measure them empirically, and there has been some important work along those
lines. But you have no deeper structure to examine, no way to relate agglomeration to more micro-level
features of the economy.
Land Rent and Land Use
We finally come to the last of my five traditions: the analysis of land rent and land use, deriving directly
from von Thünen and his pioneering Isolated State.
Von Thünen's idea is, by now, thoroughly familiar to almost all economists although even this analysis
is neglected in the principles textbooks. He envisaged an agricultural plain supplying a variety of
products to an isolated central city; and he realized that one could think of the simultaneous
determination of a land rent gradient declining from the center to an outer limit of cultivation, and of a
series of rings in which different crops would be cultivated and/or different farming methods adopted.
Thus the high-rent land near the center would be reserved for crops with high costs of transportation
and/or crops yielding high value per acre; the outermost ring would consist of either land-intensive or
cheaply transported crops.
If one judges the importance of an idea by the amount of work it has inspired, then von Thünen's
contribution far
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