chapter  4
The Aggregation of Perfectly Rational Choices
WithYorgos Y Papageorgiou
Pages 22

This chapter describes a class of remarkably simple relationships between the total cost of urban transportation and the total value of urban land net of its opportunity cost, both estimated at equilibrium. Over the continuum of urban shapes, the total value of urban land net of its opportunity cost gradually decreases from being equal to the total cost of urban transportation to one-half of that cost. In consequence the total value of urban land net of its opportunity cost, which reflects centrality, also decreases. The elasticity of the urban area with respect to distance is the ratio between the relative change in the urban area enclosed within a certain distance from the centre and the relative change in that distance. The relationship between the two aggregate measures of the city at equilibrium is directed by two elasticities, the elasticity of transportation costs with respect to distance and the elasticity of the urban area with respect to distance.