What is the Alonso bid-rent model and how does it explain land use around the CBD?

• A. It holds that land rent increases with distance from the CBD due to higher accessibility.
• B. It states land rent declines with distance from the CBD as accessibility falls; households and firms bid for land, shaping rings of land use by willingness to pay.
• C. It suggests rents are fixed across a city regardless of location.
• D. It implies land use is determined solely by zoning categories.

Answer: (B)

The key idea is that land value is driven by accessibility to the central business district. In the Alonso bid-rent model, every user—households and firms—summaries their willingness to pay for a unit of land at a given distance from the CBD. Because being close to the CBD provides greater access to jobs, markets, and amenities, the value of that accessibility is highest near the center and falls as you move outward. As a result, land rents decline with distance, since the benefit of being near the CBD diminishes and transport costs to the center rise.

Land uses locate where their bid rents just cover the land rent available at that distance, creating concentric rings of use. Those that gain the most from proximity, like offices and retail, cluster closest to the center; uses with less reliance on that accessibility or with higher transport costs farther out occupy the outer rings. This explains the typical city pattern as a gradient of land use driven by how much each activity is willing to pay for proximity, not by fixed rents or by zoning alone.