AltInst: Road tolls would centralize cities

From: Robin Hanson <>
Date: Thu Sep 03 1998 - 13:01:55 PDT

Charging people for using roads has long been proposed as a
way to rationalize road traffic. The following paper suggests
that the result of tolls would be to encourage people to live
closer together.

"Congestion, Land Use and Job Dispersion: A General Equilibrium
      Journal of Urban Economics, 1998, Forthcoming

              State University of New York at Buffalo
              Department of Economics
           RONG XU
              Stanford University
              Department of Engineering-Economic Systems

 Contact: ALEX ANAS
  Postal: State University of New York at Buffalo
           Department of Economics
           415 Fronczak Hall
           Amherst, NY 14260 USA
   Phone: Not available
     Fax: Not available
 Co-Auth: RONG XU
  Postal: Stanford University
           Department of Engineering-Economic Systems
           Stanford, CA 94305 USA

 In dispersed cities, congestion tolls would drive up central
 wages and rents and would induce centrally located producers to
 want to disperse closer to their workers and their customers,
 paying lower rents and realizing productivity gains from land to
 labor substitution. But the tolls would also induce residents to
 want to locate more centrally in order to economize on commuting
 and shopping travel. In a computable general equilibrium model,
 we find that the centralizing effect of tolls on residences
 dominates on the decentralizing effect of tolls on firms causing
 the dispersed city to have more centralized job and population
 densities. Under stylized parameters, we find that efficiency
 gains from levying congestion tolls on work and shopping travel
 are 3.0% of average income. About 80% of such gains come from
 road planning and 20% from tolls.

JEL Classification: D58, R14, R41

Robin Hanson
RWJF Health Policy Scholar, Sch. of Public Health 510-643-1884
140 Warren Hall, UC Berkeley, CA 94720-7360 FAX: 510-643-8614

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Received on Thu Sep 3 20:19:38 1998

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