DRAFT: Please do not quote without permission The Role of Spatial Externalities in the Evolution of Urban Sprawl

Abstract: A dynamic model of a land developer’s conversion decision is constructed, in which spatial externalities influence the expected value of a parcel in alternative uses and lead to interaction effects over time among developers. Using theory and simulation results, we show that for a critical range of positive and negative externalities, these effects lead to the evolution of a scattered, noncontiguous pattern of residential subdivision development that is qualitatively similar to the observed pattern of residential subdivisions development in many U.S. exurban areas. The hypothesized presence of these interaction effects has implications for the dynamic evolution of land use pattern and growth management policy