Clark University

Review
Reviewed Work(s): Location and Land Use: Toward a General Theory of Land Rent by
William Alonso
Review by: Michael Chisholm
Source: Economic Geography, Vol. 42, No. 3 (Jul., 1966), pp. 277-279
Published by: Clark University
Stable URL: http://www.jstor.org/stable/142015
Accessed: 21-07-2017 08:36 UTC

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 BOOK
earlier The Image of the City (Cambridge, Mass.,
1960), is a solidly empirical book. Drivers'
perceptions were recorded as they moved at
various speeds on several urban highways in
the East, most systematically along 6Y4 miles
of the Northeast Expressway from Revere to
downtown Boston. Sketches of dominant ob-
jects, surfaces, and other visual impressions
supplemented these stream-of-consciousness ob-
servations. A composite subjective landscape
emerged, showing what people actually saw,
how they saw it, and how they related it to
themselves.
A notation system expresses all these visual
impacts in diagrammatic form. There are
different sets of symbols for the apparent
motion of the observer and of his visual field, for
the nature and position of surrounding objects
and surfaces, for the proportions of space en-
closed in the visual field, for the intensity and
direction of light, for spatial sequences, and for
the direction of principal views. But the symbols
are so numerous and varied-some are wholly
abstract, others ideographic, still others pic-
torial-that the notations convey little of the
general impression and can be interpreted in
detail only with considerable effort.
Finally the authors show how routes could
be relocated and roadways and surroundings
designed to enhance the pleasure of driving.
Visual access to landmarks and to landscape
features that identify and enrich locality and
orientation; a wide range of pattern, texture,
and color in pavement, terrain, and building
material, displayed in an ordered sequence;
transitions from tunnelled enclosures to open
space; and changes in slope and curvature, speed
and acceleration, light and shadow, are some
of the considerations they stress.
The View from the Road deals principally
with the commuter's route into the central city.
Similar inquiries are needed for roads in other
environments and with other users. We should
also learn about the visual impact of roads on
residents and pedestrians, of whose milieu the
highway also forms part-all too often an in-
trusive part, jarring in appearance, daunting in
scale, disruptive in location. Such studies might
well utilize the techniques employed in this
pioneering volume. But they ought not emulate
its physical qualities. Scattered more or less at
random on the oversized pages of this cumbrous
book are small photographs, diagrammatic
sketches, bits of text with marginal numbers,
and large areas of white space. The idea of por-
traying sequential experience within the com-
pass of one page does not justify the scrappy
appearance of the whole. Nor does the design
justify the price of the book. At $15 it is beyond
the reach of most potential readers.
DAVID LOWENTHAL
A merican Geographical Society
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REVIEWS 277
Location and Land Use: Toward a General
Theory of Land Rent, by WILLIAM ALONSO.
xi and 201 pp.; diagrs., index. Harvard
University Press, Cambridge, Mass., 1964.
$5.50. 8'2 x 534 inches.
At a casual glance, this book appears to
assume a considerable knowledge of mathe-
matics. In practice, by a skillful arrangement
of the text and a careful use of diagrams, the
author has made it possible for the non-mathe-
matician to follow most of the argument if he
will bother to learn the meanings attached to a
small number of symbols. The more sophisti-
cated sections are in effect elaborations of points
made in a simple and comprehensible manner
in the text.
To introduce his subject, the author briefly
traces the history of ideas concerning the nature
and origin of land value, from the eighteenth
century to date. Virtually all authors since
Ricardo and von Thanen have regarded land
value as arising from the advantages that one
site has over another for particular kinds of
activity or for specific users (firms or individ-
uals). Such advantages arise from the varying
nature of sites (Ricardo's case) or from location
(von Thanen), or from both in combination. By
a process of bidding which may be actual or
merely potential bidding-between users and
uses, each site is allocated to the highest bid.
If the market economy functions without any
impediment, the highest bid will be made by
that use/user for which the disadvantages of
being at some other site are the greatest. This
approach is common ground to most writers,
and it has been highly developed in the context
of agricultural location. Rather less attention
has been given to the question of intra-urban
patterns of location and most of the work in
this particular field has borrowed von Thtinen's
ideas on agricultural location, in which the
central theme is distance from a single market
center and the resulting pattern a series of con-
centric circles of various land uses.
Alonso accepts this approach and applies
it to the problem of intra-urban patterns of
land use. In itself, this is orthodox procedure,
but the author makes an important contribu-
tion by directing attention to: (1) the distribu-
tion of residential land uses, particularly to
different quality levels of residential use (tene-
ments, suburban villas, etc.). (2) The fact that
in establishing the relative locations of land
uses it is important also to consider the size of
plots demanded. Both of these points have
been curiously neglected in the literature, de-
spite the fact that von ThiUnen made specific
reference to the question of farm size. The
other significant contribution made by Alonso
is a formulation of the manner in which bids
for plots of land can be determined if the neces-
sary data are available.
The problem that Alonso sets out to explore
 278 ECONOMIC GEOGRAPHY
is the mechanism whereby the actual and poten-
tial bids of users and uses are reconciled to
produce an equilibrium situation. For this to
be achieved, all firms and individuals must be
in equilibrium and all sites within the settled
zone must be occupied. Numerous simplifying
assumptions are made, of which only a few key
ones are here mentioned. The terrain is com-
pletely uniform and all land is available un-
encumbered by legal restrictions or existing
buildings and other constructions. All employ-
ment and all services are concentrated in the
center of the city. Property owners are divided
into three classes-agricultural producers, man-
ufacturing or service entrepreneurs, and private
households on residential sites. With modifica-
tions to suit each of these three classes of land
user, the price that can be bid to command
any site depends primarily on its location, which
equals distance from the center of the city (i.e.,
distance from places of work, marketing of
farm produce, shopping, etc.).
In the case of agriculture, a farmer can sell
all his produce in the central market at the
ruling price and the major factor affecting his
revenues (and one should add disbursements)
is the cost of transport to the city. The price
that can be bid for land is, therefore, the trans-
port saving obtained compared with that for
other plots further from the city. The urban
entrepreneur must consider both the costs of
running a business and the volume of sales
pertaining to each site, in his attempt to max-
imize profits. Size of plot is, therefore, im-
portant for the urban firm, as this will affect
the volume of sales at a particular site for a
given kind of activity. (The author fails to
recognize that the same is true of agricultural
enterprises.) The private citizen seeks to max-
imize his satisfaction from a family budget
that can be taken as fixed. His expenditure is
divided into three parts: cost of commuting,
which increases with distance from the center;
outlay on land, which varies with location and
the size of plot; all other expenditures. Pay-
ments for land and transport are regarded as
substitutes for each other and Alonso assumes
that the sum of these two outlays bears a fairly
regular relationship to income.
Given these propositions, it is possible to
derive for each firm and household a series of
bid-price curves. These are statements to the
effect that for any ruling circumstances the firm
or individual would be willing to bid x pounds
per acre for each of sites I . . . n. From these
bid-price curves, the general distribution of
urban land uses can be derived.
The model that is developed is open to criti-
cism on two main grounds. In the first place,
many of the assumptions are unrealistic. But
it would be churlish to pursue this criticism in
view of difficulties inherent in the construction
of models and the hope that with the passage
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of time better founded assumptions can be
incorporated. Second, is the question whether
the model as developed is internally consistent.
Fundamental to Alonso's argument is the
proposition that all travel is radial to the center
of the city, where all service and employment
facilities are found. The location of one category
of land use is thereby assumed as given, though
the possibility of two or more urban centers
competing with each other is allowed in Chapter
6. From the beginning, therefore, it is ambitious
to claim that the book is an approach to a
general theory of land rent; at the most, it is
a contribution to a partial theory, since employ-
ment and shopping facilities, etc., may as well
be on the periphery of towns as in the center.
One aspect of this defect is especially evident
in Chapter 3, where the urban firm, allegedly
engaged in any kind of activity, is really treated
as a retail outlet. The location of a shop with
respect to the center of a city does materially
affect its volume of sales as well as its costs of
operation, whereas only the latter will vary
significantly for a manufacturing enterprise.
The confusion between an urban firm in general
and a retail outlet in particular leads Alonso
into a further error. The analysis of the urban
firm is based upon the assumption of monopoly
trading, which is tenable if one conceives of
retailing as occuring at geographically separate
sites, each outlet having a monopoly of sales
within a defined territory. From this assump-
tion of monopolistic practices, the author argues
that each urban firm will seek to maximize its
profits and by implication the realized profits
will vary from firm to firm (p. 55). This con-
ception is inconsistent with the idea that all
functions are concentrated at the city center,
for, if all purchasers have to travel to the middle
of the town, wherein resides the monopoly
element for each enterprise? Furthermore, it is
difficult to see how other urban enterprises, such
as manufacturing establishments, can gain
monopolistic advantages from location at one
spot rather than another within the city. But
worse still, the possibility of variable profit
levels is ruled out on page 77: one of the condi-
tions that is given for the land market to be in
equilibrium is that "no user of land can increase
his profits or satisfaction by moving to some
other location or by buying more or less land."
To meet this condition, "normal" profits must
prevail for urban firms, just as they are assumed
to prevail in the agricultural sector. The treat-
ment of profits and of the conditions or com-
petition is therefore inconsistent.
In the agricultural sector, it is assumed that
there is unlimited freedom for farmers to enter
(or leave) the business; for urban firms, a limited
freedom of entry and exit is postulated (which
is consistent with the assumption of monopolistic
trading conditions); on the other hand, the
number of residents seeking sites is taken as
 BOOK
given. Therefore, for example, if a new urban
firm is established and seeks to recruit em-
ployees, these can be obtained only by attract-
ing workers from another firm, in which case
there is no net addition to employment oppor-
tunities, or by absorbing previously unemployed
workers. Under the assumptions made by the
author, there is no particular reason why an
equilibrium that allocates all land and so clears
the land market will also ensure full employ-
ment for all citizens and productive resources
other than land. This is a problem analogous
to that which Keynes attempted to solve for
a national economy. Unless the number of all
three classes of land user is allowed to vary, the
analysis developed by Alonso must remain a
partial theory and may not be able to yield a
genuine equilibrium, since the existence of
unemployed labor or capital equipment would
affect the bid-price curves of individuals and
firms.
The last major point to be noted here is the
convention adopted by the author of analyzing
the value of land nude of development, i.e., site
value. In the whole of the discussion, it is the
price and quantity of land that is considered
and no explicit account is taken of the cost of
buildings. The outlay for residential buildings
may be included in the item "all other goods
and services" on which the individual spends
whatever is not taken up by the cost of land
and commuting. If this is the case, it would
help the analysis if the cost of capital invest-
ment and maintenance of constructions were
considered explicitly, since it seems reasonable
to suppose that it is land plus buildings plus
commuting that bears a constant relation to
income, not just the cost of land and commut-
ing. In this context, the empirical material that
is quoted in support of the theoretical argu-
ment, drawn from Philadelphia, relates family
income and location to the amount spent on
developed residential sites (pp. 125-127 and
170-171). Therefore, not only is the theoretical
formulation incomplete, but the supporting
empirical material is in fact based on somewhat
different values.
In addition to the above major points, there
are some minor blemishes in the book that
could usefully be rectified in a second printing.
The discussion of the urban firm (a retail out-
let) takes account of marginal costs and revenues
for sites of various sizes and at different loca-
tions. On page 46, and also in Figure 13, mar-
ginal gross revenue is assumed to decline as the
plot size becomes bigger, eventually becoming
negative. At least in the retail trade, it seems
more plausible to suggest that marginal gross
revenue will initially increase with size of plot
before the decline sets in. A negative marginal
gross revenue seems unlikely for a retail store
and certainly would not apply to some kinds
of urban enterprise, such as manufacturing.
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REVIEWS 279
(A marginal net revenue that becomes negative
is, however, to be expected for any enterprise
that becomes too big.)
Occasionally, the notation t used for equa-
tions is confusing. For example, on pages 45
and 53 the expression V = V(t, q) appears,
where V is the volume of sales in dollars, t is
location of the firm and q is the size of the
site. The expression ought to be written in the
form that V is a function of t and q, rather than
that V equals V multiplied by some factor
of t and q.
Alonso draws a number of conclusions from
his analysis. Since the logical basis on which
they rest is itself somewhat suspect, the con-
clusions must in some cases be treated with
reserve. Nevertheless, they are important and
deserve to be tested, something for which the
author makes a strong plea. First, and this is
incontestable, Alonso shows that the optimum
spatial arrangement of a city will not necessarily
be one in which the sum of "friction " costs
(travel expenses plus land rent) is minimal. The
notion of minimal friction costs as the optimum
arrangement can only be sustained on the
ceteris paribus principle that all the other values
of society are given. This is an unlikely proposi-
tion because it implies a particular set of prefer-
ences among land users. Second, and highly
plausible, is the proposition that those users
whose bid-price curves decline steeply with
distance will obtain the use of the land near
the city center; users whose bid-price curves
decline slowly will be "pushed" to more distant
areas. The only serious qualification to this
proposition is that potential users of land whose
bid-price curves have a steep slope, but whose
highest bid-price is low, will in fact be priced
out of the particular land market. Third, is the
conclusion that it is quite normal for low-income
families to occupy central sites of high value
while high-income families are located toward
the urban periphery, where land values are
lower. The key to this apparent paradox lies
in the amount of space purchased and the
quality of the accommodation. A large number
of low-income families crammed onto a limited
site may yield a higher annual rent per acre
than will a richer family occupying a larger
area. There is, therefore, no need to explain the
phenomenon in terms of obsolescence of proper-
ties, population growth, or the immigration of
alien communities, or by other special circum-
stances. This is an important but controversial
finding that needs further examination.
In sum, this is a stimulating book on an
important theme but it needs to be read with
care. If it is recommended to students, some
guidance ought to be offered lest they become
a little confused.
MICHAEL CHISHOLM
University of Bristol