2005
Abstract:
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.
