5432887__Land_Values__R

5432887__Land_Values__R - Land Values Running head: LAND...

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Land Values 1 Running head: LAND VALUES: A LITERATURE REVIEW Land Values: A Literature Review [Author’s Name] [Institution’s Name]
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Land Values 2 Land Values: A Literature Review Many researches in studies of land values show the system’s high degree of complexity when all interactions amongst consumers and suppliers are included, generating a complex non- linear mathematical problem. Some complexity is due to the diversity of agents with different and interdependent behavior. (Thorsnes, P., McMillen, D.P., 1998) Households, for example, behave differently in relation to socioeconomic attributes, whereas firms behave differently in relation to economic activity and business size; all of these interact through various forms of location externalities. Additionally, real estate options provided by suppliers are differentiated goods, distinguished by dwelling attributes as well as by their location. At the same time, production costs are subject to scale and scope economies. Finally, the state plays a strong role by imposing a variety of regulations that affect the market. Many researchers explore the land value–size relationship using sales of only large parcels, a few use sales on only small parcels, while some partition land sales data. The relationship between the size of a parcel of unimproved land and its value is a subject of interest in the literature, both from a theoretical and a practical perspective. From the original conjecture, that the relationship should be linear, to the model proposed herein, the challenge has been to better understand land values. As per
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Land Values 3 general determinants of land values internationally, the importance of space for land use policy has grown with the development of urban areas and technological innovation. As, for instance, Raufer (1998) points out, during the industrial revolution cities could not easily grow beyond a given dimension unless they solved the sanitary sewerage and water drainage system, which typically involved the location of the network . Since then, many utilities compete for space, from water or gas pipes to optic fiber cables. The same pattern could be traced regarding some transportation systems, both public and private. It is very common to see parking spaces in city centers. And something similar has happened with buildings too. In places with severe weather conditions, some built-up spaces tend to be located. In other cities, it is the very high value of land that presses development, mainly in city centers. In Japan, for instance, prime land has more and more been developed, for a wide variety of uses: retailing, offices, cultural, etc. As more uses compete for prime locations, the more relevant the subject of subsurface rights and values becomes. All instances face a common feature, though. The use of land causes many externalities. By definition, the presence of externalities modifies the social opportunity cost of space leaving the private cost unchanged, and leads the market to assign a non- optimal amount of the resource consumption from a social
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This note was uploaded on 11/29/2010 for the course MANAGEMENT EM-14793 taught by Professor Lindaryaan during the Spring '08 term at Windsor.

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5432887__Land_Values__R - Land Values Running head: LAND...

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