Journal
REGIONAL SCIENCE AND URBAN ECONOMICS
Volume 66, Issue -, Pages 213-223Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/j.regsciurbeco.2017.07.001
Keywords
Land market; Residential land use; Urban sprawl; Auction; Housing markets; Thin market
Categories
Funding
- James S. McDonnell Foundation
- National Science Foundation [DEB0423476, GSS1127055]
- Agricultural and Food Research Initiative [CFDA10.310]
- National Institute of Food and Agriculture [ORE00817B, NE1049]
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This paper investigates the conditions under which thin residential land markets generate an incentive for leapfrog development. We provide empirical evidence that suggests the presence of thinly traded land market in exurban areas. We develop a spatial model of an exurban land market that incorporates this key feature and show the conditions under which leapfrog development emerges. Specifically, given increasing market thinness with distance and a limited number of heterogeneous buyers, higher income households are able to bid down land prices at farther away locations. This creates an incentive for leapfrog development and leads to a positive income gradient, which we also confirm empirically.
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