The bid-rent theory proposes that land values in cities are determined by the amount that different land users, such as businesses and households, are willing to pay for access to central locations. In developed countries, where there is often a higher concentration of economic activities and services in the central city, land values are higher in the center and decrease as one moves farther away from the city center. This leads to a distinct pattern of land use and development, with higher density and taller buildings in the center, and lower densities and lower-rise buildings as one moves outward.
In developing countries, the bid-rent theory can help explain the internal structure of cities where economic activities and services are often dispersed across the city. In these cities, land values may be higher in areas where there is more transportation access, leading to the development of dispersed business centers or employment nodes around the city. As a result, the pattern of land use and development may be less centralized, with multiple centers of development rather than a single central business district. However, the bid-rent theory can still help explain how land values and economic activities are distributed throughout the city based on transportation access and other factors.