Abstract
The main purpose of this paper is to examine the effect of the road construction on the distribution of the population in a small and open city where the border is limited by natural environment.
It is often stated that when the traffic system is improved, the population of the city is spread and the population density at the center of the city decreases. We deduced that there exists two cases: one is that the price of the commodities increases and the transportation rates decreases by the improvement of the roads. That implies that CIF prices of the commodities increases at the center, and decreases at the border. Consequently, the population decreases at the center and increases at the border. The other case is that both the prices of the commodities and the transportation rates decreases. Consequently, the population increases uniformly all over the city.
Which one appears in the reality depends on the preference of the residents among the commodities and the land. The former case appears when the Marginal Rate of Substitution decreases with relatively constant speed. While the latter case appears when the MRS of the land to the consumption decreases sufficiently slowly near the center, and sufficiently quickly near the border.
We also discussed more general city where the border is not limited and compare the results obtained in each case.
