Constructal theory of economics

This paper extends to economics of the constructal theory of generation of shape and structure in natural flow systems that connect one point to a fin ite size area or volume. By invoking the principle of cost minimization in the transport of goods between a point and an area, it is possible to antic ipate the dendritic pattern of transport routes that cover the area, and th e shapes and numbers of the interstitial areas of the dendrite. It is also shown that by maximizing the revenue in transactions between a point and an area, it is possible to derive not only the dendritic pattern of routes an d their interstices, but also the optimal size of the smallest (elemental) interstitial area. Every geometric detail of the dendritic structures is th e result of a single (deterministic) generating principle. The refining of the performance of a rough design (e.g. rectangles-in-a-rectangle) pushes t he design towards a structure that resembles a theoretically fractal struct ure (triangle-in-triangle). The concluding section shows that the law of op timal refraction of transport routes is a manifestation of the same princip le and can be used to optimize further the dendritic patterns. The chief co nclusion is that the constructal law of physics has a powerful and establis hed analogue in economics: the law of parsimony. The constructal theory, as extended in this paper, unites the naturally-organized flow structures tha t occur spontaneously over a vast territory, from geophysics to biology and economics. (C) 2000 Published by Elsevier Science Ltd. All rights reserved .