Modeling a location equilibrium in discrete space was first described in the
bid-rent approach of Alonso 1 . In a competitive market, land or housing units
go to the household offering the highest bid, which in turn is based on the net
value or utility of the parcel to the household. In addition to this ‘‘highest use’’
condition, a location equilibrium requires that each household be allocated to a
parcel, and that the number of households assigned to each parcel cannot
exceed its supply or capacity