A "Bid-Price Curve": A set of combinations of land prices and distances among which the individual is indifferent. It shows the land rent the household could pay at each distance in order to achieve a predetermined utility level (thus there is a bid price curve for every utility level). The bid price function answers the question: As the individual considers residential locations at different locations in the city, i.e. at increasing distances from the city center, what price of land would allow her to buy sufficient amount of land (and other goods) to enjoy as much satisfaction as a given (starting) price (and amount of land) at the city center.

The residential bid price curve is "the set of prices for land the individual could pay at various distances while deriving a constant level of satisfaction." (p.59)
Alonso stresses three points in his characterization of the bid price curve:

1. every individual or household has her own bid price curve. Others have other curves
2. every bid price curve represents a given utility level. There is family of bid price curves representing different utility levels, analogous to the wellknown indifference curves
3. prices represented by the bid price curve have no necessary relations to actual prices: "A bid price is hypothetical, merely saying that, if the price of land were such, the individual would be satisfied to a given degree." (p.59)

The bid price function for the urban firm would be defined as follows: It describes the prices which the firm is willing to pay at different locations (distances from the city center) in order to achieve a certain level of profits.

See also:

• An Introduction to Regional Economics, by Edgar M. Hoover and Frank Giarratani, Ch.6 (Land Use)
• Alonso's Bid Rent Function Theory

Alonso, William (1933-1999)

• Momorial

  William Alonso, Richard Saltonstall professor of population policy, died on February 11, 1999.

• Harvard University Gazette (Memorial Feb.1999)

  Born in Buenos Aires, Alonso began his career with a bachelor's degree in architectural science from Harvard in 1954. He also received a master's degree in city planning from Harvard in 1956 and a doctorate in regional science from the University of Pennsylvania in 1960....

• William Alonso, IV. CITIES, REGIONS AND INTERNATIONAL COMMUNITIES [THE URBAN AGENDA: THE EFFECTS OF GLOBALIZATION ON MAJOR CITIES March 21, 1997]

Other Literature (related to Alonso urban land-use work):

Harrison S. Campbell, Jr., Bid Rent and Location Gradients: The Importance of Relative Location

Egan DJ, Nield K., Towards a theory of intraurban hotel location, URBAN STUDIES 37 (3): 611-621 MAR 2000 Times Cited: 0

Clippings:

Workers trade long commutes for less expensive housing Seattle Times, Tuesday, May 28, 2002 [incl. by county commuting times data]By Rebecca Cook