Using data on vacant land sales in Washington County, Oregon, the authors find that plans for light rail investments have positive effects on land values in proposed station areas. These findings suggest that such capitalization is likely to discourage the development of low-density housing in station areas and encourage high-density, transportation-oriented development. More important, the results provide support for a model in which planning is rational behavior by a local government and that plans—independent of regulations— can be used to alter urban development patterns for the purpose of increasing social welfare. To the extent that these results hold more generally, these results suggest that plans indeed matter.
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