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The Cost of Imposing Monocentricity: Uncovering the Dynamics of Emerging Centrality in Post-Socialist Krakow's Land Markets.

Christian L. Redfearn
In 1989, Poland undertook a series of institutional reforms that effectively introduced economic competition into land markets. Over the next several years ownership rights to land previously under government control were distributed to individuals and ¯rms. Prior to reforms, land had been allocated by central planners, leaving land use in Krakow substantially at odds with that typically found in market-oriented cities. This paper analyzes the extent and speed of adjustment to the price surface for residential land in Krakow's new markets for land. In particular, the paper focuses on the establishment and evolution of a system of centers in which land trades at a premium relative to its physical characteristics. The data employed are vacant parcels, which a®ord a clean measure of land prices and their spatial distribution. Using an nonparametric approach to identify pricing centers { \nodes" of similarly-sized hedonic regression residuals { a clear trend towards centrality is found. While the traditional city center emerges as the dominant node, the evolution of the price surface is far more complex than that found using alternative approaches. The nonparametric method reveals an evolving and polycentric price surface. Accordingly, it yields superior explanatory power compared to simpler monocentric models and should provide some caution to their use in metropolitan areas in transition or those that are polycentric.