Economics is conventionally divided into two types of analysis: microeconomics and macroeconomics. Microeconomics studies how individuals and firms allocate scarce resources, whereas macroeconomics analyses economywide phenomena, resulting from decision-making in all markets. One way to understand the distinction between these two approaches is to consider some generalised examples. Microeconomics is concerned with determining how prices, values and rents emerge and change, and how firms respond. It involves an examination of the effects of new taxes and government incentives, the characteristics of demand, determination of a firm’s profit, and so on. In other words, it tries to understand the economic motives of market participants such as landowners, developers, occupiers and investors. This diverse set of participants is rather fragmented and at times adversarial – but microeconomic analysis works on the basis that we can generalise about the behaviour of these parties. A particular branch of economics known as urban land economics is concerned with the microeconomic implications of scarcity and the allocation of urban property rights. Ball et al. (1998) in the preface to their book state that: ‘The microeconomics of commercial property, proved to be the most difficult [area] to draw together. There simply does not exist an adequate and complete general microeconomic theory of urban property markets.’ This is true and an attempt to develop such a theory is not attempted here! Instead this section brings together and explains the key microeconomic concepts and theories that have a bearing on urban property markets and the important work of authors such as Harvey (1981), Fraser (1993) and Myers (2006) in relating classical economic concepts and theories to urban land and property markets is acknowledged.