Modeling a central place system with interurban transport costs and complex rural hinterlands

Central place models have made important contributions to the theory of systems of cities by providing interesting insights to the hierarchical structure and location pattern of cities. However, they have been criticized for lack of economic foundations. Following the traditional central place framework, this paper develops a spatial equilibrium model of a system of cities, and emphasizes the spatial dimension of their hinterlands by modeling interurban transport costs and nonuniform two-dimensional rural areas. The model considers only two levels of cities in order to examine the mechanism of forming a central place structure. Given various sets of exogenous parameters pertaining to the production of agricultural and various industrial goods, people's consumption preferences and transportation technologies, the model is solved numerically, and response functions are estimated and analyzed. In the context of spatial equilibrium, we can explain what determines the number of cities, their sizes and location pattern, as well as the wage rates and prices of various goods in the system. (C) 1999 Elsevier Science B.V. All rights reserved.