Publication Date:
2016-03-19
Description:
We study how congestion tolls and an urban growth boundary should be designed optimally in a monocentric city with both car and public transit commuting from the suburbs to the central city. The existing monocentric city literature has repeatedly shown that mitigating the congestion externality causes the densification of population toward the city center. In contrast, we find the opposite of densification can occur if public transit mode is present. Modal substitution effect limits the centralizing force of anti-congestion policies. In addition, redistributing tax revenues among residents generates a decentralizing effect by increasing housing demand because marginal utility of income is higher in suburbs. At the optimum, mitigating congestion can cause urban sprawl depending on degree of substitutability between automobile and public transit, relative congestibility of the two modes, tax revenue redistribution and preferences for location and lot size.
Keywords:
D61 - Allocative Efficiency
;
Cost-Benefit Analysis, D62 - Externalities, H21 - Efficiency
;
Optimal Taxation, H23 - Externalities
;
Redistributive Effects
;
Environmental Taxes and Subsidies, H44 - Publicly Provided Goods: Mixed Markets, R13 - General Equilibrium and Welfare Economic Analysis of Regional Economies, R14 - Land Use Patterns, R41 - Transportation: Demand, Supply, and Congestion
;
Safety and Accidents
;
Transportation Noise, R48 - Government Pricing
;
Regulatory Policies, R52 - Land Use and Other Regulations
Print ISSN:
1468-2702
Electronic ISSN:
1468-2710
Topics:
Geography
,
Economics
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