Interregional economic growth with transportation and residential distribution

The paper proposes a model of interregional economic growth model with travel time, housing, residential distribution, and amenity. The economy consists of multiple regions and each region consists of the CBD and the residential area (like in the standard Alonso model). All the markets are perfectly competitive. The paper demonstrates a way to integrate some important models in the literature in transportation research, economic growth theory, urban economics, and regional economics. The simulation results for a 3-region economy provide some interesting insights into national economic development, regional agglomeration, and urban configuration. We demonstrate, for instance, that when the technologically most advanced region improves its transportation conditions, the national output is increased, the advanced region attracts more people from the other two regions, the advanced region’s industrial and housing output levels are increased, the other two regions’ output levels are reduced, the land and housing rents and residential distribution in the advanced region are reduced near the CBD and increased far away from the CBD, and the land and housing rents and residential distribution in the other two regions are reduced over the entire residential areas.