The spatial structure of production with a Leontief technology

The structure of the optimal spatial pattern of production is studied when there are interdependencies among production units which can be described by a Leontief technology, and when there is a single marketplace of final demand, the CBD. Transportation cost is proportional to distance. It is shown that the various goods are produced in rings which can be ranked by distance from the CBD independently of the levels of final demand. Furthermore shipment of goods for meeting intermediate and final demand can only be in the direction of the CBD and no shipment of goods towards the periphery can occur. A finite algorithm is given for the construction of the optimal pattern and for determining a system of f.o.b. prices and land rents which sustain it as a competitive equilibrium.