Geography Reference
In-Depth Information
share parameter, f
l,i,e
, is determined by the input of the hth factor by the ith firm in
the eth AEZ, F
h,i,e
.
f
l
;
i
;
e
¼ fl
;
e
ð
Flabor
;
i
;
e
;
Fcaptial
;
i
;
e
Þ
ð
2
:
3
Þ
The land demand input in commodity production is determined by the eco-
nomic system, because the economic links in the comprehensive macroeconomic
framework provided by CGE model are tightly connected with each other. Each
shock to economic system will influence the area demand of lands input in
commodity production. For example, the growth in the rate of direct tax will lead
to an increase in government revenues and a decrease in household income. Then,
the structure differences of investments and consumptions between government
and household determine the change of commodity demand structure. Under the
market-clearing condition, the commodity production and supply structure should
be altered. And finally, the area demand of lands input in commodity production
will change.
As one of the economic models, the economic module assumes that the ultimate
purpose of economic development is to increase the economic utility of household.
Household's economic utility is dependent on the amount of consumption of
commodity, which are purchased from producers.
Uec ¼
Y
i
Xp
v
i
ð
2
:
4
Þ
i
where, Uec is the economic utility; Xp
i
is the amount of consumption of the ith
commodity; and v
i
is the share parameter in the economic utility function.
The economic utility is indirectly restrained by the area of land used for eco-
nomic development. In reality, the earnings from endowments of land are the
component household's income which is the constraint of household consumption.
And the input of land in production by producer determines the output and supply
of commodity. Nevertheless, we only consider the constraint function of land in
production in this module because the earnings from the endowment of land are
not included when accounting income constraints. The economic development can
be summarized as the following optimization problem:
Uec ¼
Y
i
Xp
v
i
maximize
Ueco
;
Uent
ð
2
:
5
Þ
i
f
g
subject to
Tland ¼
X
e
X
l
X
i
Aec
l
;
i
;
e
ð
2
:
6
Þ
where, Tland is the total land area which is exogenously defined. Equation (
2.5
)
shows the objective function of economic utility to be maximized; and Eq. (
2.6
)is
a total land area constraint equation meaning that total land areas used for com-
modity production must equal to the total land area used in economic activity on
