Recent work in regional science, geography, and urban economics has advanced spatial modeling of land markets and land use by incorporating greater spatial complexity, including multiple sources of spatial heterogeneity, multiple spatial scales, and spatial dynamics. Doing so has required a move away from relying solely on analytical models to partial or full reliance on computational methods that can account for these added features of spatial complexity. In the first part of the paper, we review economic models of urban land development that have incorporated greater spatial complexity, focusing on spatial simulation models with spatial endogenous feedbacks and multiple sources of spatial heterogeneity. The second part of the paper presents a spatial simulation model of exurban land development using an auction model to represent household bidding that extends the traditional Capozza and Helsley (1990) model of urban growth to account for spatial dynamics in the form of local land use spillovers and spatially heterogeneous land characteristics.

This study estimates the effects of an urban growth boundary (UGB) on land development decisions in Knox County, TN, using a heteroscedastic probit model. With combined effects of increased land development within the city boundary and decreased development within the UGB and the neighboring town of Farragut after the implementation of UGB, the UGB of Knox County has been successful in urban revitalization within the city boundary and discouraging urban sprawl. These UGB impacts may be related to the city government having the right to annex land parcels within the UGB without consent of land owners.

The impact of an urban growth boundary (UGB) on land development in Knox County, TN is estimated via two-stage probit and neural-network models. The insignificance of UGB variable in the two-stage probit model and more visible development patterns in the western part of Knoxville and the neighboring town of Farragut during the post-UGB period in both models suggest that the UGB has not curtailed urban sprawl. Although the network model is found to be a viable alternative to more conventional discrete choice approach for improving the predictability of land development, it is at the cost of evaluating marginal effects.