THE STRUCTURE OF URBAN LAND PRICES

Recognition of the existence of nonlinear land prices has an impact on the measurement of the rate at which land price declines with distanc e from the urban center. It is hypothesized that concave parcel prices have given rise to overly large estimates of the rate of price declin e with distance, because parcel sizes increase with distance and incre ased parcel sizes would be associated with lower unit prices as a resu lt of the concavity of the land price function. This hypothesis is emp irically tested using vacant residential, commercial, and industrial l and sales from within Cook County, Illinois. An important finding is t hat allowing for concavity greatly reduces, although it does not elimi nate, measured rates of price decline with distance. (C) 1997 Academic Press.