Scaling behavior in land markets

Abstract

In this paper, we present an analysis of power law statistics on land markets. There have been no other studies that have analyzed power law statistics on land markets up to now. We analyzed a database of the assessed value of land, which is officially monitored and made available to the public by the Ministry of Land, Infrastructure, and Transport, Government of Japan (the data on the assessed value of land for this paper is available on the Ministry of Land, Infrastructure and Transport Government of Japan's World-Wide Web site). This is the largest database of Japan's land prices, and consists of approximately 30,000 points for each year of a 6-year period (1995–2000). By analyzing the data on the assessed value of land, we were able to determine the power law distributions of the land prices and of the relative prices of the land. The data fit to a very good degree the approximation of power law distributions. We also found that the price fluctuations were amplified with the level of the price. These results hold for the data for each of the six annual intervals. Our empirical findings present the conditions that any empirically accurate theories of land market must satisfy.