ECO100Y1 Lecture : Rectangular Land Market Model
Document Summary
These notes elaborate on a land-market model presented in o"sullivan"s textbook urban economics . Building on the textbook"s analysis, our focus will be on these key questions: N what is the impact on land rents if an endogenous output price replaces the textbook"s exogenous output price?1. The rectangular model is introduced in the section bid-rent curves for the. Manufacturing sector (pages 122-124, 7th edition, or 102-104, 6th edition). In that section"s figure 6-1, we see an equilibrium bid rent curve (= bid rent function, abbreviated here as brf). The brf shows zero-economic-profit land rents for manufacturing firms as a function of distance (x) from a highway. The zero-economic-profit condition is met when firms earn only the profit required to stay in business. The textbook discussion continues in a general equilibrium model of a. Monocentric city (pages 192-194, 7th edition, or 157-160, 6th edition).
