Part 1 of this two-part paper presented a spatial economic model of the urban development process which captures developers' profit-seeking behaviour, communities' welfare-seeking behaviour, and the mediating effects of alternative systems of land-use rights. Different systems of rights were shown to result in different land-use and density outcomes. In part 2 we describe the simulation model used to implement the theoretical model. The emphasis is on explaining the cellular automata methodology, but we also go on to illustrate the model output by comparing the structure and economic performance of two simulations. One simulates a free-market city in which developers have full property rights over land use. The other simulates a city in which the community has land-use rights and uses these to regulate development densities at socially optimal levels.