ABSTRACT
This chapter establishes a model of an urban economy and analyse within it how the various markets for goods and factors of production, particularly land, interact within it. Within this model, there is no planning system and no planning authority — in fact, no government activity at all. The chapter considers how the price and allocation of land are determined within an urban area to which our assumptions apply. Within the simple model, the allocation of land between the two uses are considered — employment and housing — in total and in respect of its spatial pattern — is the outcome of the interaction of a large number of factors, including both the technology of production and the preferences of individuals for different kinds of housing, for accessibility and for goods. In the model, the key decisions, as far as allocation of land and the erection of buildings are concerned, are taken by the builder/developer.
