Year Published
1999
Abstract
The transformation of the Polish economy during the early 1990s offers an unusual opportunity
to examine the evolution of a new market for urban land. There has been a great deal of
theoretical and empirical research focused on urban land value functions that has derived from
the work of Muth (1969) and Mills (1972). Data sets permitting the empirical testing of
theoretical structures are few but two sources for the city of Chicago have resulted in numerous
studies focusing on this city. These sources are Hoyt (1933) and "Olcott's Land Values Blue
Book of Chicago" which together provide actual and estimated values for tracts of land in
Chicago at various intervals from 1830 to 1990. These sources are discussed and the data
analyzed using non-parametric techniques in McMillen (1996). Most studies have found that a
fourth-order polynomial is required to explain land values and that as time as passed, the land
value function has become more complex as transportation systems and neighborhoods have
evolved and employment nodes and shopping districts have multiplied. For example, McDonald
and Bowman (1979) find that explanatory power declines over time and that more complex
functional forms do a better job of explaining variation in land price perhaps reflecting
increasing complexity of the urban environment and the increasing likelihood that distance from
the city center provides an inadequate explanation. In this study, we begin an analysis of land
values in Cracow using parametric techniques in order to benchmark our outcomes against the
results of prior studies in developed market economies. At this stage, we do not address the issue
of selectivity bias or a dynamic approach. In the next section, we summarize political and
economics events leading up to, as well as the strategy implemented by the leadership in Poland
to privatize land markets. In the third and fourth sections, we discuss the theory and describe the
data set which has been accumulated. We follow that with our analysis, results and ideas for
future research.
to examine the evolution of a new market for urban land. There has been a great deal of
theoretical and empirical research focused on urban land value functions that has derived from
the work of Muth (1969) and Mills (1972). Data sets permitting the empirical testing of
theoretical structures are few but two sources for the city of Chicago have resulted in numerous
studies focusing on this city. These sources are Hoyt (1933) and "Olcott's Land Values Blue
Book of Chicago" which together provide actual and estimated values for tracts of land in
Chicago at various intervals from 1830 to 1990. These sources are discussed and the data
analyzed using non-parametric techniques in McMillen (1996). Most studies have found that a
fourth-order polynomial is required to explain land values and that as time as passed, the land
value function has become more complex as transportation systems and neighborhoods have
evolved and employment nodes and shopping districts have multiplied. For example, McDonald
and Bowman (1979) find that explanatory power declines over time and that more complex
functional forms do a better job of explaining variation in land price perhaps reflecting
increasing complexity of the urban environment and the increasing likelihood that distance from
the city center provides an inadequate explanation. In this study, we begin an analysis of land
values in Cracow using parametric techniques in order to benchmark our outcomes against the
results of prior studies in developed market economies. At this stage, we do not address the issue
of selectivity bias or a dynamic approach. In the next section, we summarize political and
economics events leading up to, as well as the strategy implemented by the leadership in Poland
to privatize land markets. In the third and fourth sections, we discuss the theory and describe the
data set which has been accumulated. We follow that with our analysis, results and ideas for
future research.
Research Category
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