As an extension of the author's previous study the factor share of land rent was studied in a production function analysis in an effort to discriminate the most effective measure that should be taken to alleviate the grave problem of high land price in Japan.
In the present analysis the share of land rent in GNP was assumed to be equal to the ratio G of total national land price over GNP multiplied by the interest rate i.
Results obtained are:
i) In any economy the factor share Gi of land rent should vary in accordance with changes in the physical make up of social infrastructure and with changes in the land intensiveness of industries.
ii) The above requirement precludes the use of the Cobb-Douglas function necessitating a recource to the variable factor share type production functions. Attributes of such production functions were clarified.
iii) Measured data show that the share Gi of land rent is approximately equal in values throughout the 47 prefectures in Japan. The present analysis clarified the mechanism that brings about this tendency.
iv) It was found that the measure most effective in decreasing the share Gi of land rent thus leading to the practical solution of the high land price problem is to replace the low dencity sprawl prevailing in most big cities in Japan with low cost high rise structures such as the Compact City proposed by Danzig10)
