Bid-Rent Theory
Definition
The Bid-Rent Theory is an economic theory that explains how the price and demand for real estate change as the distance from the central business district (CBD) increases.
Analogy
Imagine you're at a concert. The closer you are to the stage (or CBD), the more expensive tickets will be because people value being close to where all action happens. As you move further away from stage (or CBD), ticket prices decrease because people aren't willing to pay as much for less desirable locations.
Case Studies
case studiesImpact
Bid Rent Theory influences urban structure by determining land use patterns. It affects property costs, influencing where different socio-economic groups live and work, and guides city zoning and transportation planning.Related terms
Central Business District (CBD): This term refers to downtown or commercial center of a city where businesses cluster together due its high accessibility.
Urban Sprawl: This describes how cities expand outward over time into rural areas, often leading to issues such as traffic congestion and loss of farmland.
Land Use Patterns: These refer to how land in a certain area is used – for example, residential, commercial, or agricultural uses.
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