Implications of the locational surplus allocation model in the context of the residential equilibrium theory

The 'CALUTAS' land use model has been highly regarded not only for its operational capabilities but also its ways to deal with residential locations, represented by a submodel called the locational surplus allocation model. As the basic idea of this submodel has not been clarified in the sense as to how its outputs are related with the market equilibrium solutions, this article is to examine its theoretical implications in light of urban economics. We find that the utility levels of households belonging to the same household type may differ depending on their locations, while the model outputs ensure that the households with the largest surplus occupy each zone. It is also found that the model outputs cannot be attained through the competitive market mechanism unless such interventions like rent control are introduced. However, it might be possible to interpret the model as to represent a sequence of disequilibrium states observed in a course of dynamic location processes.