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Category_ID - 21
Doc_Title - Interacting Agents, Spatial Externalities and the Evolution of Residential Land Use Patterns
Doc_Author - Elena G. Irwin, Nancy E. Bockstael
Doc_Number - AEDE-WP-0010-01
Doc_Start_Date - 06/13/2001
Doc_End_Date - 06/13/2002
Doc_URL_AddLocal - C:\WINNT\ACF1553.tmp
Tag_Functional - AED Econ Working Paper
Tag_SubUnit - Regional and Community Economics
Tag_Program - NULL
Tag_Industry - NULL
Tag_Misc - Urban
Tag_Resources - Land Use
Tag_Practice - Community,Development,Land Markets,Regional Economics,Rural-Urban

We develop a model of land use conversion that incorporates local spillover effects among spatially distributed agents. The model is used to test the hypothesis that fragmented patterns of development in rural-urban fringe areas could be due to negative externalities that create a “repelling” effect among residential land parcels. Identification of the hypothesized interaction effect is complicated by unobserved, spatially correlated heterogeneity. Using an identification strategy that bounds the interaction effect from above, we find empirical evidence that is consistent with a theory of negative interactions among recently developed residential subdivisions in exurban Maryland. The result offers an alternative explanation for low-density sprawl to that frequently posited in the economics literature, but one with potentially quite different efficiency implications (JEL: R14, C29). Keywords: land use pattern, spatial externalities, interactions-based models, sprawl