SPATIAL EQUILIBRIUM RESIDENTIAL LAND VALUES IN A MULTICENTER SETTING

In his well known Location and Land Use, Alonso [l] extended the economic theory of consumer behavior to a spatial setting. According to this theory a rational household chooses a bundle of goods that maximizes the satisfaction of its preferences and that does not exceed its income. Alonso places these rational households within an ideal city in which all jobs are concentrated into a central location, and assumes that households (a) maximize their utility by choosing an optimal mix of quantity of residential land, of distance from the city’s center, as well 88 of consumption goods, (b) subject to the constraint that the sum of the expenditures for consumption goods, residential land, and commuting does not exceed their income. Alonso’s formulation however is not mathematically operational in the sense that it does not allow the derivation of continuous land value equilibrium functions generated by the households’ competitive bidding for the available residential land (Alonso [l, p. 1501). One operationalization of his model based on a spatial equilibrium technique is due to Casetti [2]. To this effect: (a) households were assumed to be identical in composition, income, and preferences; (b) a state of spatial equilibrium was postulated in which no household has any incentive to relocate or to alter its consumption mix; and (c) a sufficient condition for the existence of such spatial equilibrium was introduced by requiring that the optimal utility level attainable by the household be spatially invariant. In the present paper, Casetti’s work is extended to a central place setting with goods, services, and centers of Merent order. This generalization is based upon a method developed by Papageorgiou [3].