The Determination of the Price of Land

Abstract

Received theories of the land market are inadequate, since they ignore the supply of land. It is known that occupiers of land are usually unwilling to sell at the market price but require compensation for being forced to move. Incorporating this as a theory of supply into land market theory allows us to explain or predict that (a) urban sprawl will occur, in the absence of planning controls, (b) a development gains tax will slow down the rate of development of land and increase its price, (c) whether land is owner occupied or occupied by tenants will affect its development, and (d) powers of compulsory purchase may be necessary for certain kinds of development but may cause social costs.

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