Urban Adaptation To Low Probability Shocks: Contrasting Terrorism And Natural Disaster Risk
Suburbanization is a long-run trend in cities around the world. All households and firms face tradeoffs in terms of location choice. Until recently, urban centers were the cultural and social epicenters and the suburbs were boring places for households needing more space and willing to put up with a long commute to the center city. Suburban locations offer cheaper land prices and a newer, more efficient building stock. While in the past transportation costs to access the productive city center posed a significant cost of suburbanization, improvements in transportation such as highways and information technology diffusion have dramatically reduced this cost.