Zoning in Cities

Abstract

Land use patterns in an urban situation arise from a whole series of individual decisions concerning location. These decisions are controlled in many different ways by the economic processes operating in society.¹ The relevant characteristics of this mechanism can be summarised briefly as follows. Each urban activity is able to derive utility from all sites in the urban zone. The utility of a site can be measured by the rent the activity is willing to pay. Ultimately competition in the urban land market for the use of available sites results in the occupation of each site by an activity which is able to derive the greatest utility from that site and which is willing to pay most to occupy it. The logical outcome of this concept is the emergence in an urban area of an orderly pattern of land uses in which rents are maximised throughout and all activities are optimally located. This process is the same as von Thünen’s formulation of the ordering of land uses in agricultural areas in relation to a market centre. As in von Thünen, in the urban land market we can also explain rent differentials among homogeneous sites by rising (or falling) transport costs.