This paper was presented at the conference "Policies to Promote Affordable Housing," cosponsored by the Federal Reserve Bank of New York and New York University's Furman Center for Real Estate and Urban Policy, February 7, 2002. It was part of Session 4: Housing Subsidies and Finance.

For centuries, cities have been modeled as geographically centered markets in which locational scarcity generates Ricardian Land Rent that in turn increases over time as cities grow. This paper first presents some empirical evidence that this is not the case: inflation-adjusted locational rent...