LAND RENTS AND TRANSPORT IMPROVEMENTS - SOME URBAN PARABLES

Define a transportation improvement's ''impact zone'' as the area with in which resident households and business firms regularly utilize the improvement. Three simple parables suggest that the increases in impac t-zone land rents that usually accompany improvements do not accuratel y reflect its benefits. Seemingly modest variations in the demand and supply relationships that characterize impact-zone residents can have major effects on the relationship between benefits received and the la nd-rent changes that are measured. Generally speaking, increases in im pact-zone land rents substantially understate benefits unless these be nefits are small either absolutely (because the improvement is modest) or relatively (because the impact zone is part of a homogeneous area of much larger size).