Spatial Distribution of Land Prices & Densities

The Models Developed by Economists

+ Alain Bertaud


Many planners believe that population densities can be fixed by design as cities expand.  Many urban development plans aim at compact cities growth.  However, compact cities are possible only with very high land prices produced by constraints on land supply.  In this paper I show that the spatial distribution of land prices and densities are closely correlated and that they follow a predictable pattern produced by market forces.  By using models developed by economists, planners could better understand both the pattern of densities in existing cities and how these densities are likely to respond to changes in size of population, households’ income, and transportation speed and cost.  I provide operational examples showing how planners can use economic models to project land and infrastructure needs for urban expansion.  Using the master plan of Hanoi as an example, I show that disregarding the predictable forces exerted by the labor and land market results in poor chances for implementation and a misallocation of infrastructure investments.  I conclude by showing the important role planners can play in designing infrastructure and land regulations once they have understood the mechanisms driving urban labor and land markets.  



Alain Bertaud is a Senior Fellow at the Marron Institute.

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