The Cost of Imposing Monocentricity: Uncovering the Dynamics of Emerging Centrality in Post-Socialist Krakow's Land Markets

Christian L. Redfearn

No 8586, Working Paper from USC Lusk Center for Real Estate

Abstract: In 1989, Poland undertook a series of institutional reforms that effectively introduced economiccompetition into land markets. Over the next several years ownership rights to land previouslyunder government control were distributed to individuals and ¯rms. Prior to reforms, land hadbeen allocated by central planners, leaving land use in Krakow substantially at odds with thattypically found in market-oriented cities. This paper analyzes the extent and speed of adjustmentto the price surface for residential land in Krakow's new markets for land. In particular, thepaper focuses on the establishment and evolution of a system of centers in which land trades at apremium relative to its physical characteristics. The data employed are vacant parcels, which a®orda clean measure of land prices and their spatial distribution. Using an nonparametric approachto identify pricing centers { \nodes" of similarly-sized hedonic regression residuals { a clear trendtowards centrality is found. While the traditional city center emerges as the dominant node, theevolution of the price surface is far more complex than that found using alternative approaches.The nonparametric method reveals an evolving and polycentric price surface. Accordingly, it yieldssuperior explanatory power compared to simpler monocentric models and should provide somecaution to their use in metropolitan areas in transition or those that are polycentric.

Keywords: Intrametropolitan land dynamics; land price gradient; spatial econometrics; emerging markets (search for similar items in EconPapers)
Date: 2005
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Persistent link: https://EconPapers.repec.org/RePEc:luk:wpaper:8586

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