Most of the recent theoretical literature on the internal structure of cities has assumed that a city is organized around a predetermined center, and that all traffic in the city is oriented toward that point. This is an oversimplification. It is not correct that all traffic in modern cities either goes to the center or comes from the center. In this paper we assume that every individual travels to every location in the city. The individuals choose locations that minimize the sum of their transportation and housing expenditures. Results are obtained for a social optimization and for a competitive equilibrium. In both cases there is a center where the density and land prices are higher; the density decreases with distance from this center. The optimal city is more dense than the ‘competitive’ one owing to externalities which are not taken into account in the latter case.

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