Optimization of central places in an industrial economy

Abstract

This paper presents a model to determine the optimal number, size, location and allocation of central places in industrial economies. We consider a hierarchy of central places ranging from towns, cities and a regional capital. The model is based upon the minimization of the total cost (sum of the manufacturing cost and distribution cost). The manufacturing cost is taken as a function of city size and the optimal distribution of manufacturing firms is the same as the optimal distribution of central places. The total cost function is a non-linear one and it has integer variables. A heuristic procedure is described for the solution. To extend the model into a more generalized form by including other activities is also discussed.