Location Theory - Land Use Determination
The projection of the bid rent curve on an area reveals the classic Residential-Commercial-Industrial (RCI) zoning model of urban planning. This example enlarges on this idea by assuming the central commercial business district is surrounded by a concentric ring of light industrial (Industrial I), then a ring of residential, then another ring of heavy industrial (Industrial II), then agricultural.
The area devoted to each use can be easily computed by noticing that the distance from the center constitutes a radius. Subtracting the area removed from the circle of interest by the next smaller circle leaves the area in use by a particular type. There is, of course, a correlation between rent offered and how much land is committed to a particular use.
R. J. Brown, Private Real Estate Investment: Data Analysis and Decision Making, Burlington, MA: Elsevier Academic Press, 2005.