Urban political economy holds a very important theoretical and practical application to the political and economic functions within society.  “Urban political economy refers to the way that people occupy and use space” (Diskin 1).  There are many factors associated with this very broad definition.  For instance, economic activity and housing within the United States falls under this broad umbrella.  The governmental functions and private financial undertakings associated with the occupation and usage of space can be very complex.  Legal concerns such as individual, governmental and private rights to space and the rights that individuals have to use the space as they wish also fall under urban political economy.  Most importantly, however, is the economic factor that exists.  Essentially, every single decision that someone or a group makes to use, distribute and occupy space has an economic consequence.  These consequences may be positive or negative and can vary in degree, but they will always exist.

Murray described urban political economy whereby theorists “look upon the cityscape as a contested terrain, where spatial politics involve struggles over the use of urban space, particularly in regard to who belongs where and with what entitlements or citizenship rights” (4).  This definition adds another important factor to the definition of urban political economy in which “urban” is the main concern.  The city or urban environment implies a limited space.  Cities such as New York City or Chicago create very crucial spatial problems that also increase the value of space, again having a positive or negative impact on the economy.  To solve many of the spatial problems, architects have designed ways to build space upward instead of outward.  This process also brings its own particular struggles; however, urban political economy theories help shed light on how to properly address them constructively and what political or economic programs can provide assistance to these spatial problems and concerns.