A Residential Location Model with Endogenous Land Price

The Regional population is one of the most important factors for the regional planning. In the infrastructure planning fields planners generally approach the regional population forecast by using of Land Use Model, which is focused on analysis of interactions among various land users in the urban area.It is well known that the land price is determined by the equilibrium between supply and demand, however very few previous land use models have explicitly focused on that equilibrium. That is, although demanding behaviour was modelled in a micro-level by using of Utilty Theory, supplying behaviour was not modelled exactly because of its lack of land supply theory. As the result those models can explicitly forecast the impacts of various government policies on neither land supply side nor land price.In order to avoid those demerits, we construct a land use model without modelling supplying behaviour. First construct a demand function by using of Randum Utility Theory which describes consumer behaviour, and assume a simple supply function which has only land price, population and zone area as a supply limit, and then induce a land price function from the equilibrium condition on the land market. Simultaneously construct a residential choice function on the process of constructing the demand function. So this model may be viewed in expressing the equilibrium condition on the land market without modelling supplying behaviour, because it is with endogenous land market equilibrium price.In this paper we also examine the applicability of this model through the case study of applying to Gifu Prefecture. On estimating the number of households and the land price at each zone, this model is proved to have ability of reappearing present condition, but not enough reliable for the estimation of these change. The reason of the latter result could be that in this model(1) the interaction of population migration between inside and outside of the subject region was not considered, and(2) the real estate is treated as similar to general consumer goods in spite of inclining to be regarded as the subject of speculation in Japan.This model will also be able to estimate the effect of any environmental improvement projects, because the residential choice function of this model has those factors. But unfortunately those factors was not adopted to this model in the case study because of their statistical insignificance.