The authors detail an urban economics experiment that is easily run in the classroom. The experiment has a flexible design that allows the instructor to explore how congestion, zoning, public transportation, and taxation levels determine the bid-rent function. Heterogeneous agents in the experiment compete for land use utilizing a simple auction mechanism. Using the data that is collected, a bid-rent function is derived, and the experimental treatment is altered over the course of three sessions to uncover core concepts in urban economics. Moreover, this provides a tangible experience that can be used to help undergraduates relate to urban issues such as the steep rent gradient found around many larger colleges and universities.
Bergman, Margo; Mateer, Dirk; Reksulak, Michael; Rork, Jonathan; Wilson, Rick; and Zirkle, David, "Your Place in Space:
Classroom Experiment on Spatial Location Theory" (2008). ExCEN Working Papers. 107.