Land Values, Land Use, and the First Chicago Zoning Ordinance

This article examines whether the pattern of urban land use should have been regulated by local government in the 1920s, the decade in which many cities adopted their first zoning ordinances. The study is based on the assumption that land values are influenced by the mix of land use on the block. Conditions for land-value maximization are derived, and the circumstances under which land-use zoning can increase land values are discussed. Empirical land-value and land-use functions are estimated for Chicago in 1921, two years before the first Chicago zoning ordinance was adopted. The empirical results for land values imply that the land-use zoning system adopted in 1923 could not have brought about a general increase in land values. The empirical results for land use document the regularities in the use of land prior to the introduction of zoning.