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II. Urban Land
Use
A. Land Rent and Manufacturing Land
1. Price of land
a. Definitions
- Land rent - periodic payment by a
land user to a land owner
- Market value - amount paid to become
the land owner
PV = R / i
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- Land rent is considered to be
"price" of land
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b. Agricultural rent
- David Ricardo - price of agricultural land
based on fertility (productivity)
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- Leftover principle - competition
among farmers for land leads to landlords getting the leftovers
(excess of total revenue over nonland costs)
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2. Manufacturing sector
- Accessibility to export transportation more
important than fertility
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a. Freight vs. labor costs
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Assume inputs and outputs go through a
central freight terminal
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Inputs shipped from central freight
terminal to manufacturing facility and vice versa for outputs
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Labor must be compensated for longer
commuting costs
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b. Impact of
intracity truck
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c. Impact of
intercity truck and beltways
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