Commuting, Ricardian rent and house price appreciation in cities with dispersed employment and mixed land-use

40 Pages·2002·1.4 MB·English

by  Wheaton, William C., 1944-

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Massachusetts Institute of Technology
Departnnent ot Economics
Working Paper Series
COMMUTING, RICARDIAN RENT AND HOUSE PRICE
APPRECIATION IN CITIES WITH
DISPERSED EMPLOYMENT AND MIXED LAND-USE
William C. Wheaton
Working Paper 02-35
March 2002
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E52-251
50 Memorial Drive
MA
Cambridge, 02142
This paper can be downloaded without charge from the
Social Science Research Network Paper Collection at
http://papers.ssm.com/abstract_id=339482
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Draft: March 23, 2002
Commuting, Ricardian Rent and House Price
Appreciation in Cities with Dispersed
Employment and Mixed Land-Use
By
William C. Wheaton
Department ofEconomics
Center forReal Estate
MIT
Cambridge, Mass 02139
[email protected]
Originally presented at the 2001 meeting ofthe Asian Real Estate Society, August 1-4,
2001
Keio University, Tokyo, Japan

Abstract:
Commuting, Ricardian Rent and House Price Appreciation
In Cities with Dispersed Employment and Mixed Land Use
Forcenturies, cities have been modeled as geographically centered markets in which
locational scarcity generates Ricardian Land Rent, that inturn increases overtime as
cities grow. This paper firstpresents some empirical evidence that this is notthe case:
inflation-adjusted locational rent does not mcrease overtime- despite enormousurban
growth. Ratherthantryingto explainthis tendency within a "monocentric" framework,
thispaperdevelops a model wherejobs and commerce canbe spatially interspersedwith
residences,undercertain economic conditions. Thepaperpresents new empirical
evidence that suchjob dispersal does characterize at least US cities. The comparative
statics ofthis model are much more consistent withthe data- accommodating extensive
urban growth with httle orno increase in commuting and RicardianRent.