Urban land value functions and the price elasticity of demand for housing

Abstract

The structural characteristics of an urban area are determined to a great extent by the spatial pattern of land values. It is thus important to develop urban land value functions which accurately describe the spatial structure of cities. This paper provides evidence on the functional form of the relationship between land values and distance from the city center. Using historical data for Chicago, the Box and Cox transformation technique is employed to examine the land value function. The functional form parameter can be used to determine the price elasticity of demand for housing.