Incorporating Spatial Complexity into Economic Models of Land Markets and Land Use Change

Recent work in regional science, geography, and urban economics has advanced spatial modeling of land markets and land use by incorporating greater spatial complexity, including multiple sources of spatial heterogeneity, multiple spatial scales, and spatial dynamics. Doing so has required a move away from relying solely on analytical models to partial or full reliance on computational methods that can account for these added features of spatial complexity. In the first part of the paper, we review economic models of urban land development that have incorporated greater spatial complexity, focusing on spatial simulation models with spatial endogenous feedbacks and multiple sources of spatial heterogeneity. The second part of the paper presents a spatial simulation model of exurban land development using an auction model to represent household bidding that extends the traditional Capozza and Helsley (1990) model of urban growth to account for spatial dynamics in the form of local land use spillovers and spatially heterogeneous land characteristics.