.Contents
LAND RENT, SPATIAL ORGANIZATION, THE STATE AND THE MARKET
3  Production of urban space
 Csaba Deák
                   04 March 3

2 Market & State4 São Paulo Space is produced: locations result
Space is defined through the relationships between its elements: locations
Relationships: building of infrastructure (State)
A location is posited as a commodity (private property) and its price regulates spatial organization of activities
But it cannot be produced (as a commodity)
Land price: competition for location in urban space
So far as rents, profits, wages, prices, are determined by competition, laws may be assigned for them. Assume competition to be their exclusive regulator, and principles of broad generality and scientific precision may be laid down, according to which they will be regulated. The political economist justly deems this his proper business: and as an abstract or hypothetical science, political economy cannot be required to do, and indeed cannot do, anything more. But it would be a great misconception of the actual course of human affairs, to suppose that competition exercises in fact this unlimited sway. 
John Stuart Mill Principles..., 1848: II.4.2
Competition is induced (infrastructure) and restricted (regulations) by the State

Intervention in space: an example
Consider urban structure (right, top) and a location L in it (green spot):
- Use value of L is one of the lowest (indeed, a favela in SP)
Consider building two Metrô lines: Southwestern and Northeastern (right, bottom):
- Effects of SW line: (already high) prices along it do not go up;
       rise in Centre and fall in extreme southern sub-centre (Berrini) 
-   Effects of Northeastern line: prices rise at location L and the whole Eastern zone
       fall somewhat everywhere else