Efficient Land Use in an Equilibrium Residential Annulus

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Abstract
An efficient land use is one where land is divided between residential activity and roads to minimize aggregate transportation costs. We analyze such an allocation for the case where each consumer is in equilibrium. The problem synthesizes the approaches in the Mills-de Ferranti analysis and the Solow analysis. In Solow, consumers were in equilibrium but land was allocated by rule of thumb; in Mills-de Ferranti land was efficiently allocated in aggregate but each consumer was allocated a fixed area for his residence. The efficient land allocation is characterized by declining convex functions of distance from the CBD for density on roads and in residential activity for the case of Cobb-Douglas utility functions.
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