SPATIAL MODEL OF LAND MARKET BEHAVIOR

While there are differences in coefficients and differences in the general level of land prices across areas, the overall response of land prices to spatial characteristics with the transcendental model is remarkably similar across the three land market areas studied. The transcendental model privides relatively stable results, both within and across data sets. The two most critical specification issues are: 1) obtaining a consistent relationship between land price and the real tax rate and building value control variables which imply a nonarithmetic scaling of the price variable such as log price, and 2) allowing for nonlinear relationships with other variables, in particular parcel size. Arithmetic functions do not satisfy these conditions and result in different price response estimates, not only across data sets, but within data sets across alternative model specifications and subsamples of data.-Authors