Fujita, Masahisa

Born in Yamaguchi prefecture (Japan) in 1943, Masahisa Fujita completed a BS in civil engineering at Kyoto University in 1966. Soon after, he went to the Department of Regional Science of the University of Pennsylvania, where he graduated with his PhD in 1972. He then became a professor of regional science there. After two decades, he joined the faculty of the Institute of Economic Research of Kyoto University, where he remained until 2006. Fujita is the recipient of the 1983 Tord Palander Prize, the 1998 Walter Isard Award in Regional Science, and the First Alonso Prize awarded with Paul Krugman.

Out of more than 100 scientific books and articles, some major contributions emerge. The core of urban economics is the monocentric city model of which Fujita's urban economic theory provides the definitive exposition. The main weakness of this model was the lack of explanation for the existence of a central business district. Fujita argued that cities are concentrations of agents of different types (mainly, firms and households). The centripetal force is communications among firms, which permit the exchange of information: [Page 283]Other things being equal, each firm has an incentive to establish itself close to the others, thus fostering the agglomeration of firms. The centrifugal force is less straightforward and involves land and labor markets. The clustering of many firms in a single area increases the average commuting distance for workers, which in turn increases the wage rate and land rent in the area surrounding the cluster. Such high wages and land rents discourage further agglomeration of firms in the same area. The equilibrium distributions of firms and households are thus a balance between these opposite forces. In two seminal papers published in the early 1980s, Fujita identified the conditions to be imposed on communication fields and commuting costs for a monocentric, polycen-tric, or integrated urban pattern to emerge as the market outcome.

The dominant view through about 1990 was that agglomeration was a condition produced by spatial externalities of various types, including knowledge spillovers, matching externalities in labor markets, and the provision of local public goods. The more recent approach, with roots in general equilibrium models of monopolistic competition, focuses on demand side advantages arising from clustering when agents have a preference for variety and local competition is limited by product differentiation. In 1988, Fujita developed the monopolistic competition foundations of the economics of agglomeration, which makes him one of the founders of the new economic geography. In The Spatial Economy, coauthored with Paul Krugman and Anthony Venables, Fujita provided a synthetic application of nonlinear dynamics to regional economics and international trade, as well as to urban economics. This book is a landmark in spatial economics and has established new economic geography as an economic field proper.