Endogenous Generation of Road Networks -A Two Dimensional Urban Economics Approach-

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Behaviors of firms, households, commodity transport agent, labor transport agent, a local government and an absentee land owner are considered in a two dimensional plain city. The geographical condition is heterogeneous on different points. Hence the transportation costs are different at each point. This endogenously generates various shapes of road networks in our model. Each firm is assumed to be homogenous, and produces commodities inputting labor, capital stock and land. Each household endows capital stock and labor, and it perfectly inelastically supply them to firms. Each household is assumed to consume goods so as to maximize its utility function. Land inputs by firms and households are assumed to be substitutive with other factor inputs. Based on the model mentioned above, some numerical simulations were conducted.