let us look in this lesson at the bid rain curve it's a simple theory to explain urban structure when we think about land within the urban area access to the market is key for any business and so when we look at the value of land it tends to fall as you have an increasing distance from the city center because business wants to be in the center of the city and what we notice then that the average land occupied by each household or business activity tends to increase with increasing distance from the city center so in other words people have bigger spaces that they can occupy we move further away from the city center now we need to understand why is that why is land close to the city center the space occupied they're much smaller much more compact and as you move further out the size of land becomes bigger for land use another factor that we need to factor in that determines where you want to be is the transport cost because remember this is the only cost that a business can control and so in order to control their transport costs they want to be as close as possible to the cbd so in looking at land use and land value within the city center we need to assume that the city has a circular area around it so in other words people can get to the cbd from anywhere so the circle really refers to accessibility we also need to realize that a business wants to obtain the greatest return from the land so location of where the business is is very important because you want to make sure that you make the most profit in order to purchase or rent that land and so this then brings us to the bid rent curve so what do we mean by the bid rent curve the bid rent curve is a line which indicates how much a person is prepared to pay for a unit of land at varying distance from the market or from the city centre and what we notice as a general rule is that land prices will decline as distance from the cbd increases now let's illustrate this in a very simple graphic so we look at on the y-axis the rent value and we look at the x-axis the distance and so what we then get is distance from cbd and we see the falling in of land value now let's unpack this in greater detail so we've got land value or rent and we've got distance from the cbd now let's look first of all at commercial land commercial land will want to be as close as possible to the cbd so there's a certain distance at which there'll be zero demand for the business to be there the zero demand doesn't help it doesn't make profit and so therefore it's not going to be prepared to actually be there at that particular a position so it will compete for getting as much of the the space in the cbd that's why it's uh land value but is very high it's prepared to pay a lot of money to be able to be in the cbd or close to the cbd then the second land uses industrial land now industrial land doesn't want to be in the cbd because it needs a space and so because commercial land has got such a great demand on that space they are not prepared to pay the kind of prices for the land that commercial businesses are prepared to pay and so that is why they start off with a lower bid and so therefore there's a certain point at which it is not profitable for them to be that distance away from the cbd and the reason why they have a zero demand as you indicated then green is because at that point it becomes unprofitable for them to transport the goods all the way to the cbd the transport cost is too much and so therefore that is why there's zero demand at that point and then finally residential areas don't want to be in the cbd and so they want to be further out but there's a certain point at which there'll be zero demand for land because it's too far from the city because people might be working in the city shopping in the city so what happens is there's a certain distance beyond peop which people will not want to obtain the land and so what we then see as we saw early on there's a general rule that there's a decline of land value as we move from the cbd towards the outside of the city center now what does this then show for us it shows us then that we have decreasing demand for land and because we have this decreasing demand for land we see something interesting with regard to the patterns that happen now with regard to land use at that point over there we're going to get a point of competition why do we say it's a point of competition because can you see at that point commercial land and industrial land are competing for the space so what happens is this that while the zero demand is not there at the point of competition beyond that point of competition towards zero demand you won't find any uh commercial activities because industrial uh uh land use would want to pay more for the land and so therefore as you see in the circle the commercial land is now becomes exclusive as seen in the blue circle so that area now is exclusively used for commercial land you won't find any industry there because the industry can't pay the prices for the land that the commercial land uses users can pay and so therefore that area now becomes the area exclusively for the use of commercial activities when we look further on between industrial and residential we get a competition there so at that point what happens now is that residential land wants to be there as opposed to industrial land and so what happens is this that at the point of competition between the point of competition and the point of zero demand you won't find any industries anymore because residential land is going to bid more for that and so therefore now you see in the orange circle you see the commercial land and finally on the outside you see the residential land so what you then end up seeing what the bid rent curve is showing us is that there's exclusive use areas within the city center so let's look at them again you get commercial land use and notice we said that the average size increases as you move further away from the cbd and so commercial land is much smaller and because there's a great demand what ends up happening it ends up happening that you maximize space and so in the commercial land space you're going to get high-rise buildings because now what happens is this you can use the space a number of times if you create high-rise buildings and so everyone is at the same position but they in order to maximize that land use you build high-rise buildings then as you move further out towards the industry what happens is they need more space and so that is why the land it becomes much larger and that's why they can't afford to pay the same prices for landing the cbd because it's very expensive and you wouldn't be able to have such large warehouses and factories in the commercial area and so therefore that's why that area is bigger and it's further away from the city center and then finally the area around that would be the indus residential land use and then at the edge of that residential land use you'll now get the rural urban fringe but modern cities don't look as we see here it's not that simple what we see is that in a modern city we have a number of outlying cbds so there's not only just one cbd their number as the city grows as we see in the grey circle the sprawling of the city it then encompasses other cbds and so what now happens we're going to get peak land intersections at certain points and so what happens is this instead of having a good rent curve we're going to have quite a complicated curve as is shown there so the land will decrease in the traditional cbd from the step into the traditional city from the cbd to the residential area but as you get to outlying cbds what happens is the land value peaks and then drops as we move away from those outlying cbds so what this really tells us is that the city is really complicated it's not only just circular in in nature but we also have around it serviced by roads so actually what we then should be looking at when we look at the bid rent curve it looks more like a spider's web isn't it and so the red roads represent the main roads and then we've got green roads that are really the the ring roads around the city and then we get points of intersection so you've got inner ring roads outer ring roads and at the points and you get other roads then at the points of intersection that is where shopping centers can now happen and that is where you're going to get your outlying cbds and so what will happen is this at those points of intersection you're going to get the outlying cbds and what's going to happen at those outlying cbds the points of intersection you're going to get shopping malls shopping malls develop there because these are intra urban networks that's where people can move so the shopping mall becomes accessible and so that is why shopping malls then become those outlying cbds and the areas around them become areas that are good for commercial activity and so what the bid rent curve then shows us it shows us why we get high rise buildings in the cities why there's maximum land use in the cbd because everybody wants to be there and then as you move further away from the city the profile drops and the land spaces becomes bigger and so then bid rent curve explains why we get different land use zones within the city