In the previous chapter we derived the conditions for the location of the household to be both optimal and stable, and it was shown that, if certain empirical relationships hold, then these conditions imply that the rent per space unit must decline with distance from the city centre at a diminishing rate. As we showed in Chapter 2 the space unit is a theoretical construct and so this prediction of the theory is not testable in this form. One object of this chapter is therefore to convert the predicted relationship between rent per space unit and distance into a testable prediction about the relationship between land values and distance.
KeywordsCity Centre Profit Maximum Total Revenue Residential Location Cost Curve
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