Wednesday, June 12, 2019

urbanization and land value

Suppose land has two uses, urban and farming, and that some land is more suitable than other land for cultivation, but the only thing that determines suitability for urban use is proximity to other urban land.  Suppose there's a single city in the middle of our universe that is growing at some exogenous rate; farming land right next to urban land is presumably worth more than similar land farther away, but I would strongly guess that fertile land next to the city is worth at least as much as infertile land next to the city.  If your land is 10 miles away, though, your land is going to be worth more if the land in between your land and the city is infertile than if it's fertile.  With some kind of spatial correlation in fertility, there's probably some distance away from the city where land value correlates negatively with fertility.

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