initially

The demand at i generated by residents of j is taken to be

k k ~Dij (p~. )e

lJ so that

k D~ l:D~ . L~1 i lJ (p~fj lJ

(6.5)

(6.6)

Here, Ek and e are constants. The former is the average demand from an individual for the product of k, though modified by the price as we will see. P~j is the price of a unit of k, produced at i, to a resident of j. This is assumed to have a spatial variation as follows:

k k kPij = Pi + ~ dij (6.7)

where P~ is the production cost at i and ~kdij represents the amount to be added, and charged to the customer, as a result of transportation costs; dij is the inter-zonal di stance and l a set of constants representing unit transport costs by sector. Thus, demand at i, from j, is supposed to decrease with distarce in a Christaller-like way: Equation (6.5) together now with (6.7) represents the idea of a Christaller demand cone.