A Dynamic Disequilibrium Model of Residential Location

Abstract

Operational models of residential location have followed two separate lines of development. The gravity and maximum entropy models are characterized by operational simplicity and adaptability to disaggregated data; they remain, however, descriptive in nature. The theoretical microeconomic models, on the other hand, have delineated the concepts of competitive equilibrium and Pareto optimality in an aggregate and deterministic way. There has been an implicit need, since the development of maximum entropy models by Wilson, to bridge the gap between the descriptive and the theoretical models. As Wilson himself has asserted: “The models will only become significantly better when they are extended to incorporate a detailed knowledge of preference structures and utility functions …” (Wilson, 1969b). The present paper is a development in this direction.