The equivalent and compensated income variations are theoretically derived for the urban location market, and the relationship between locating agents' willingness-to-pay, their expenditure and hedonic price functions are established. Then the consumers' surplus is obtained from the variation of willingness-to-pay derived from a change in location attributes and exogenous conditions (including population). Assuming a speculative behaviour, where bids differ from willingness-to-pay values, appropriate benefit measures are derived based on bid values. The calculation of these benefits from outputs of land use static equilibrium models is then explained, considering the aggregation of locators into homogeneous clusters, both for the deterministic and the stochastic discrete choice models. These benefit measures may be used to obtain an economic assessment of alternative urban planning scenarios, composed for example by transport projects, land use regulations and location incentives, exploiting the increasing capacity and economic rigor of land use and transport models.
Abstract