Land Rents and Land-Use Patterns
Land rents and intrametropolitan land use constitute the foundation of urban economics. "New Urban Economics" is the study of land rents and land-use patterns within the periurban and urban areas. Land rent is composed of two elements: site rent (ground rent), which is a function of the earnings associated with an existing location, and improvement rents, which is a function of the earnings due to the buildings or other improvements to the land. The demand for land includes both nonresidential land uses and residential uses. The expected present value of future returns to agricultural land is determined by a few buyers and sellers of land at any given moment and is thus partly subjective. Land prices vary with local market forces. The central business district (CBD) is the primary employment and transactions center of a monocentric city. Other land uses radiate in a concentric fashion from the CBD.