Chapter 2. Structural Estimation in Urban Economics Structural estimation is a methodological approach in empirical economics explicitly based on economic theory in which economic modeling estimation and empirical analysis are required to be internally consistent. This chapter illustrates the structural approach with three applications in urban economics: (1) discrete location choice (2) fiscal competition and local public good provision and (3) regional specialization. For each application we first discuss broad methodological principles of model selection and development. Next we treat issues of identification and estimation. The final step of each discussion is how estimated structural models can be used for policy analysis.