Abstract
Define a transportation improvement's “impact zone” as the area within which resident households and business firms regularly utilize the improvement. Three simple parables suggest that the increases in impact-zone land rents that usually accompany improvements do not accurately reflect its benefits. Seemingly modest variations in the demand and supply relationships that characterize impact-zone residents can have major effects on the relationship between benefits received and the land-rent changes that are measured. Generally speaking, increases in impact-zone land rents substantially understate benefits unless these benefits are small either absolutely (because the improvement is modest) or relatively (because the impact zone is part of a homogeneous area of much larger size).
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References
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Mohring Herbert (1961) Land values and the measurement of highway benefits.Journal of Political Economy 69: 236–249.
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Mohring, H. Land rents and transport improvements: Some urban parables. Transportation 20, 267–283 (1993). https://doi.org/10.1007/BF01098930
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DOI: https://doi.org/10.1007/BF01098930