ABSTRACT
This chapter presents the foundations of the Consumption Theory of Land Rent (CTLR). It is concernsed with the mechanics and methodology of the general model. The landscape upon which our ideal city is located is as follows. It is a featureless plain. The plain extends into the distance in all directions. The landscape is perfectly malleable, that is the spatial distribution of people and composition of land use can change instantaneously. There are two categories of land use: residential and nonurban. The household has perfect information about each location in the city: the price of goods there, the transportation cost there, and the quality of the environment including population density there. The households are distributed in some fashion across the residential landscape. The households must decide upon the mix of goods that will result in providing them the highest obtainable welfare that can be achieved at the particular location.
