ABSTRACT

This chapter discusses a geometry will be presented that outlines how the CTLR can be extended to examine settings where the household has an ability to choose between more than two kinds of good; the household will choose between composite good, land, and housing capital. Land and housing capital in combination form the aggregate good, housing. Housing has vintage, requires maintenance, and decays at varying rates depending upon maintenance and the initial quality of construction. The household when making a decision to purchase housing will consider how much money is to be allocated to housing versus other goods including the composite good and transportation. As the utility function can be decomposed into its constituent parts, so too can the household's budget constraint be further disaggregated into its constituent parts. Housing capital and the capital to land ratio may increase, remain constant, or decrease with increasing distance from the central business district.