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167:, who combined it with the notion of transport costs. His model implies that the rent at any location is equal to the value of its product minus production costs and transport costs. Admitting that transportation costs are constant for all activities, this will lead to a situation where activities with the highest production costs are located near the marketplace, while those with low production costs are farther away.
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in order to be located in the inner core. The inner core is very valuable for these users because it is traditionally the most accessible location for a large population. This large population is essential for department stores, which require a considerable turnover. As a result, they are willing and
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As one goes farther out, the land becomes less attractive to industry because of the reducing transportation linkages and a decreasing marketplace. Because householders do not rely heavily on these factors and can afford the reduced costs (compared with those in the inner and outer core), they can
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the accessibility of being close to the CBD and move to the edges of a settlement, where it is possible to buy more land for the same amount of money (as the bid rent theory states). Likewise, lower-income housing trades off greater living space for increased accessibility to employment. For this
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It could be assumed that, according to this theory, the poorest houses and buildings would be on the very outskirts of the city, as this is the only location that they can afford to occupy. In modern times, however, this is rarely the case, as many people prefer to
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163:, according to whom the rent on the most productive land is based on its advantage over the least productive, the competition among farmers ensuring that the full advantages go to the landlords in the form of rent. This theory was later developed by
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able to pay a very high land rent value. They maximize the potential of their site by building many stories. As one travels farther from the inner core, the amount that commerce is willing to pay declines rapidly.
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Although later used in the context of urban analysis, though not yet using this term, the bid rent theory was first developed in an agricultural context. One of the first theoreticians of bid rent effects was
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Bid rent theory has been operationalized in agent-based modelling, where it has been used to simulate the conversion of agricultural land into urban development, in a concentric city model.
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The concentric land-use structure thus generated closely resembles the urban model described above: CBD – high residential – low residential. This model, introduced by
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Land users all compete for the most accessible land within the CBD. The amount they are willing to pay is called "bid rent". The result is a pattern of
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purchase land here. The farther from the inner core, the cheaper the land. This is why inner-city areas are very densely populated (with, e.g.,
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309:"Agent-Based Urban Land Markets: Agent's Pricing Behavior, Land Prices and Urban Land Use Change"
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housing in many North
American cities, for example, is often found in the inner city, and
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Shieh, Yeung-Nan (2003-04-01). "An Early Use of Bid Rent
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