ABSTRACT
Land occupies a special niche not only in the marketplace, but also deep in the human soul. Topography matters, of course, but so does location, especially since, in contrast to many other resources, land's location is fixed. The chapter investigates some of questions. The questions include: How does the market allocate land? How well do market allocations fulfill our social criteria? Where divergences between market and socially desirable outcomes occur, what policy instruments are available to address the problems? How effective are they? Can they restore conformance between goals and outcomes? It considers several sets of problems associated with land-use inefficiencies that commonly arise in industrialized countries: sprawl and leapfrogging, incompatible land uses, undervaluation of environmental amenities, the effects of taxes on land-use conversion, and market power. The market, which tends to allocate land to the use that maximizes its value, supports land conversion as the relative values of the various land uses change.
