The problem of land value betterment: a simplified agent-based test

Yiming Wang () and Michelle Baddeley
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Yiming Wang: University College London

The Annals of Regional Science, 2016, vol. 57, issue 2, No 7, 413-436

Abstract: Abstract In this paper, we employ behaviour-driven cellular automata as a simplified agent-based modelling approach to test the seminal Coase theorem, with a policy focus on the land value betterment effect of urban infrastructure provision. Four prototypical development regimes are identified from international practice: (1) the private developer-oriented Metroland model dating back to the suburbanisation of London in the nineteenth century England; (2) the private household-led special district model, which can be observed in many contemporary US suburbs; (3) the public planning-regulated model, as featured in most post-war European welfare state countries, including the present-day UK; (4) the public state-as-developer model, which characterises what has been taking place in China. A repeated analysis of variance (ANOVA) based on the results of a large number of cellular automata simulations suggests no significant difference between models I and II in terms of their welfare outcomes measured by aggregate utility. However, models III and IV are both found to generate significantly less welfare than models I and II, under strict assumptions of zero transaction costs, perfect information, perfect capital markets and perfect competition.

JEL-codes: C63 H54 R14 R38 (search for similar items in EconPapers)
Date: 2016
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DOI: 10.1007/s00168-015-0675-z

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