TASTE HETEROGENEITY AND URBAN SPATIAL STRUCTURE - THE LOGIT MODEL AND MONOCENTRIC THEORY RECONCILED

A model of urban spatial structure for a linear and closed monocentric city is formulated by allowing the presence of randomly distributed idiosyncratic tastes for location in an otherwise uniform household population. Land use equilibrium conditions are shown to have a stochastic representation which depends on the distribution of the idiosyncratic tastes over the population of households. A special case in which the multinomial logit model gives the representative household's locational choice probability is derived and examined for a logarithmic utility function. It is shown that the stochastic equilibrium can also be obtained as the solution of a welfare optimum problem, either by maximizing total social welfare (primal) or by minimizing total opportunity cost (dual). Either formulation gives the equilibrium allocations and associated decentralizing land prices. Some comparative statics analysis is undertaken to show that while most results are like those of the Alonso-Mills-Muth model, increasing taste heterogeneity decentralizes the linear urban form, "flattening" the rent and population density gradients. The Alonso-Mills-Muth solution is obtained as an asymptotically limiting case which provides an upper bound on the "steepness" of the rent and population density gradients and a lower bound on the length of the linear city and the welfare level of the representative consumer. © 1990.