There is a substantial empirical literature quantifying the positive relationship between city size and productivity. The paper draws out the implications of this productivity relationship for evaluations of urban transport improvements. A theoretical model is developed and used to derive a wider cost-benefit measure that includes productivity effects. The order of magnitude of such effects is illustrated by calculations in a simple computable equilibrium model. It is argued tht productivity effects, particularly when combined with distortionary taxation, are quantitatively important, substantially increasing the gains that are created by urban transport improvements.
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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number
dp0651.
Find related papers by JEL classification: R20 - Urban, Rural, and Regional Economics - - Household Analysis - - - General R42 - Urban, Rural, and Regional Economics - - Transportation Systems - - - Government and Private Investment Analysis
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