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A Simple Exposition of Inequality in the Optimum Town

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  • Richard Arnott

Abstract

Mirrlees' seminal article in residential location theory discussed the welfare economics of a town where land is a consumer good. The most remarkable result was that identical individuals should not in general have equal utilities at the social welfare optimum. This paper provides a simple exposition and intuitive explanation of the result, and a further result by Riley that, with transportation costs and no location preference, the individual living further from the center of the city should have higher (lower) utility at the social welfare optimum if land is a normal (inferior) good.

Suggested Citation

  • Richard Arnott, 1976. "A Simple Exposition of Inequality in the Optimum Town," Working Paper 204, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:204
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