Bid-Rent Theory

Bid-Rent Theory explains how land prices vary depending on proximity to a city center. Essentially, businesses and individuals are willing to pay more for land that is closer to urban amenities and transportation. As you move further away from the center, land becomes cheaper. This theory illustrates how different land users, like retailers or homeowners, value locations based on their needs, leading to a hierarchical distribution of land use. In essence, the closer you are to the city, the higher the price you're likely to pay for that location due to increased demand and competition.