Question

1. The city government of Bigland is planing its land uses among 3 groups of users: business, residential and agriculture. Their bid-rent functions relationship of marginal net benefit for land and distance to city center) are as follows: MNBB = 18 -9D MNBR = 12 - 3D MNBA = 8-D (a) Calculate and describe the land area that should be allocated to the 3 groups of land users in an efficient land allocation. (b) The City of Bigland experiences a population growth which increases the land valuation in the residential group. Specifically, their bid-rent function becomes MNBR = 15-3D. Redo the calculation and discuss how the population boost changes the land allocation among the 3 groups in Bigland? (c) Assume that the Planing Department of Bigland deviates from the efficient allocation of land and uses zoning district regulation instead. What are the benefits and costs associated with zoning regulations? (d) The City of Bigland is boosting its economic growth by attracting big companies to locate there. The preferential agreements include no congestion fees, free employee parking. How does this policy affect residents behavior in terms of land use think about location choices)? What are the side effects of such policies in terms of city planing? (e) To preserve the habitat of certain indigenous tribes living in the south of Bigland, the city initiated a transferrable development rights (TDR) program that aims to compensate landowners in southern Bigland for their inability to develop their land. Describe how this program works and what are the economic incentives it introduces.

Answer 1

Answer a :-

Distance	Business	Residential	Agricultural
0	18	12	8
1	9	9	7
2	0	6	6
3		3	5
4		0	4
5			3
6			2
7			1
8			0

Therefore by looking at the above schedule and graph we find that the business will be allocated 1 unit of land the the residential area will be allocated 1 unit of land(2-1) and the agriculture will be allocated 6 units of land( 8 - 2.)

18 B 16 1DT |२ 10 f 1 6 7 Distance MNB Q2.5

Answer b :-

New schedule for residential area :-

Distance	Marginal benefit (Residential)
0	15
1	12
2	9
3	6
4	3
5	0

18 16 14 16 A Distanca

After looking at the above schedule and the graph we find that the business will be allocated 0.5 units of land residential will be allocated 3 units of land( 5 - 2) and Agriculture will be allotted 3 units of land (8 - 5).

Answer c :-

The the part of land that is given to a particular sector is not only affected by its location but also by the character of nearbuy land . to remove negative externality zoning is one of the traditional remedy .

Benefits :-

1) It provides the solution for the problem of incompatible land uses.

2) By locating similar line uses together negative externalities can be Limited or reduced to the least.

Disadvantages :-

1) it can sometimes promote urban sprawl

2) buy setting stringent standards for property zoning can lead to a lower density of population in that particular area.

Answer d :-

Preferential development of a certain area with free employee parking will attract the residents attention towards that area and they would prefer to live around and work at that particular area . This will discourage efficient allocation and will create congestion and high density of population in particular areas within surrounding that specific preferential rights area.

Answer e :-

Transferable development rights are method for shifting residential development from one portion of a community to another without putting all of the cost on the owner of the land designated for preservation.

Government identifies Areas where development is to be prohibited called as sending areas and receiving Areas where the development is to be encouraged

Economic incentives associated with Transferable development rights:-

1) the revenue from selling rights to people of receiving areas compensates the sending area owners for their inability to develop their land and make them support the restrictions .

2) to preserve the land without burning either the public budget are the owners of the preserve land.