An equilibrium model of activity location and land allocation: A simulation of the land market for Portland, Oregon
An equilibrium model of the market for urban land is formulated by combining continuous models of land consumption with discrete choice models of household location, firm location, and land allocation. The model of the demand for residential land is a composite of a continuous model of household land consumption and a discrete choice model of household location. The models of the demand for industrial and commercial land are composites of continuous models of firm land consumption and discrete choice models of firm location. The model of the supply of residential, industrial, and commercial land is a discrete choice model of landowner allocation decisions. When combined with a Walrasian price adjustment mechanism, the models of land demand and land supply can be used to calculate an equilibrium land market allocation, where the supply and demand for residential, industrial, and commercial land are equated. The residential, industrial, and commercial land rents that are a solution to the equilibrium land market allocation model completely determine the locations of households and firms; the land consumption levels of households, industrial firms, and commercial firms; and the land allocation decisions of landowners. The mathematical properties of the land demand and land supply models ensure the existence and uniqueness of a set of equilibrium land rents. The equilibrium land market allocation model is used to simulate the market for urban land in the Portland/Vancouver metropolitan region. For the Portland/Vancouver region, solutions to the equilibrium land market allocation model are calculated for a baseline scenario, an urban growth boundary scenario, and a property tax scenario. Differences between equilibrium land rents, household and firm locations, equilibrium land use, and household, firm, and landowner welfare measures are examined to evaluate the simulated effects of the urban growth boundary and property tax polices.
Area planning & development;
0999: Area planning & development