ABSTRACT
This chapter presents an analysis of the forces that determine the pattern of intensity of residential land-use in urban areas. It is especially concerned with the question of why some cities are more "spread-out" than others. The chapter outlines a simple theory of the spatial structure of the housing market. All households are identical—the same size and with the same tastes and incomes—then all households must be on the same indifference curve in equilibrium, regardless of their location. It follows that the per capita consumption of housing increases with distance, and its change per unit distance depends upon the real-income-constant price elasticity of demand for housing and the change in price per unit distance. The chapter suggests that the lower transport costs and the greater the average per household consumption of housing, the smaller the rate of decline of housing prices with distance and, hence, the smaller the density gradient.
