This research project examines the use of the rectangular street grids, an institution for partitioning and demarcating urban land as exemplified, for example, by Manhattan. Rectangular grids are pervasive in urban economies throughout the world and are implemented by governments and private developers alike. This geographic phenomenon has attracted interest from scholars in a variety of disciplines, yet little rigorous evidence exists on the causes and consequences of urban grids. The current project investigates the determinants that lead a city to adopt a rectangular grid, the process through which the grid coordinates economic behavior, and the effect the grid has on the economic value of urban land relative to alternative systems. As American cities grew in the 19th and 20th centuries, they did so predominantly through rectangular grids. These were conscious, centralized land demarcation systems intended to promote real estate development, delineate the location of activities such as manufacturing and retail, and coordinate the delivery of public goods, such as water, sewerage and electric utilities. It is hypothesized that the clear, uniform structure of the grid facilitates land markets by creating a network of similar blocks and lots that reduces the costs of acquiring information during land purchases and enhances the certainty of property boundaries. The linear alignment of the grid is also expected to reduce the cost of installing public infrastructure along roads and help to coordinate the location decisions of firms. Despite these benefits the grid also has drawbacks as its uniform structure ignores potentially valuable adjustments to local geography and the plan is often criticized as unimaginative. This research project presents a novel analysis of the tradeoffs involved in urban land demarcation by focusing on the street systems in US cities from 1860 to 1910, a time of unprecedented urban growth. Historical spatial data on property and street patterns across and within cities in the U.S. will be collected. Using geographical information systems software, metrics are subsequently created capture the shape, alignment, and uniformity of a city's demarcation system. These metrics are linked to urban economic outcomes at a particular location, such as land values, population growth, transaction frequency, industry location, and public goods provision; that are collected from a variety of archival sources. A simple analytical model documenting the net benefits of the grid is used to explain the geographical conditions under which the grid is more beneficial, and these conditions guide the empirical analysis as to where the grid is more likely to be adopted. When exploring the causal effects of the rectangular grid on outcomes, the analysis focuses on specific areas where grids are adjacent to alternative demarcation systems to provide a natural experiment in which to measure the economic impacts of the grid. The empirical setting is a time of dramatic urbanization and significant variation in the economic fate of cities, and this analysis identifies the effects of a key institutional platform through which urban economies developed. This research is motivated by recent work on agricultural land grids and builds on a growing number of empirical studies that identify relationships between geography, institutions, and economic outcomes. Such studies show the direct impacts of geography on economic growth as well as the indirect impacts geography can have through its shaping of institutions. This research addresses these larger issues by specifying the interrelationships between geography and institutions and uses spatial science to specify the mechanisms through which these institutions arise and shape economic activity.
