ABSTRACT
Land allocation The monocentric city, a basic model, has all jobs in the center, say where the export good is being produced, and residences of workers in an annulus, a sort of donut shape, surrounding the center. Each worker-household commutes back and forth each day from her residence and pays a cost per unit distance. With very similar worker-households, the wage is the same for each but commuting costs differ, depending on the distance a residence is from the center. Roughly speaking a worker with a longer (more expensive) commute gets a site for her residence that has lower-cost land. In a fairly complete model, the farther out worker-household ends up with more land per residence, with land at lower unit cost and more expenditure on commuting. When we work out when each household is in equilibrium we obtain the equilibrium land rent (price per unit per year) schedule. In other words the equilibrium land rent schedule is the schedule that allows each worker-household to be in equilibrium or be content with her “consumer choices,” including her place of residence. This view of a simple city, a disc of residences with production activity in the center, descends fairly directly from the classical analysis of land use (crop distribution) in a large farm-estate, first set out in 1849 by von Thunen, a wealthy farm-estate owner in northern Germany.
