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Transport Subsidies, System Choice, and Urban Sprawl

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  • Jan K. Brueckner

Abstract

This paper analyzes the effect of transport subsidies on the spatial expansion of cities, asking whether subsidies are a source of undesirable urban sprawl. While the cost-reducing effect of transport subsidies is offset by a higher general tax burden (which reduces the demand for space), the analysis shows that subsidies nevertheless lead to spatial expansion of cities. If the transport system exhibits constant returns to scale, the subsidies are inefficient, making the urban expansion they entail undesirable. The paper also studies transport ‘system choice.’ The city is portrayed as selecting its transport system from along a continuum of money-cost/time-cost choices.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2003/wp-cesifo-2003-11/cesifo1_wp1090.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1090.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_1090

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Keywords: transport subsidies; urban sprawl; spatial expansion of cities; transport; urban expansion;

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References

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  1. Brueckner, Jan K & Kim, Hyun-A, 2003. "Urban Sprawl and the Property Tax," International Tax and Public Finance, Springer, vol. 10(1), pages 5-23, January.
  2. Voith, Richard & Gyourko, Joseph, 2002. "Capitalization of federal taxes, the relative price of housing, and urban form: density and sorting effects," Regional Science and Urban Economics, Elsevier, vol. 32(6), pages 673-690, November.
  3. Thomas J. Nechyba & Randall P. Walsh, 2004. "Urban Sprawl," Journal of Economic Perspectives, American Economic Association, vol. 18(4), pages 177-200, Fall.
  4. Jan K. Brueckner & Harris SELOD, 2006. "The political economy of urban transport-system choice," Working Papers 10220, Institut National de la Recherche Agronomique, France.
  5. Richard Arnott & David Pines & Efraim Sadka, 1985. "The Effects of an Equiproportional Transport Improvement in a Fully-Closed Monocentric City," Working Papers 620, Queen's University, Department of Economics.
  6. Fujita, Masahisa & Ogawa, Hideaki, 1982. "Multiple equilibria and structural transition of non-monocentric urban configurations," Regional Science and Urban Economics, Elsevier, vol. 12(2), pages 161-196, May.
  7. Glaeser, Edward L. & Kahn, Matthew E., 2004. "Sprawl and urban growth," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 56, pages 2481-2527 Elsevier.
  8. Calfee, John & Winston, Clifford, 1998. "The value of automobile travel time: implications for congestion policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 83-102, July.
  9. Pines, David & Sadka, Efraim, 1986. "Comparative statics analysis of a fully closed city," Journal of Urban Economics, Elsevier, vol. 20(1), pages 1-20, July.
  10. Fujita,Masahisa, 1989. "Urban Economic Theory," Cambridge Books, Cambridge University Press, number 9780521346627, April.
  11. Hartwick, John & Schweizer, Urs & Varaiya, Pravin, 1976. "Comparative statics of a residential economy with several classes," Journal of Economic Theory, Elsevier, vol. 13(3), pages 396-413, December.
  12. Sasaki, Komei, 1990. "Income class, modal choice, and urban spatial structure," Journal of Urban Economics, Elsevier, vol. 27(3), pages 322-343, May.
  13. LeRoy, Stephen F. & Sonstelie, Jon, 1983. "Paradise lost and regained: Transportation innovation, income, and residential location," Journal of Urban Economics, Elsevier, vol. 13(1), pages 67-89, January.
  14. Wheaton, William C., 1974. "A comparative static analysis of urban spatial structure," Journal of Economic Theory, Elsevier, vol. 9(2), pages 223-237, October.
  15. Small, Kenneth A. & Gomez-Ibanez, Jose A., 1999. "Urban transportation," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 46, pages 1937-1999 Elsevier.
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Citations

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Cited by:
  1. Wolfram Richter, 2006. "Efficiency effects of tax deductions for work-related expenses," International Tax and Public Finance, Springer, vol. 13(6), pages 685-699, November.
  2. Rainald Borck & Matthias Wrede, 2008. "Subsidies for Intracity and Intercity Commuting," CESifo Working Paper Series 2321, CESifo Group Munich.
  3. Hirte, Georg & Tscharaktschiew, Stefan, 2011. "Income tax deduction of commuting expenses and tax funding in an urban CGE study: the case of German cities," Dresden Discussion Paper Series in Economics 02/11, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  4. Gusdorf, Francois & Hallegatte, Stephane, 2007. "Compact or spread-out cities: Urban planning, taxation, and the vulnerability to transportation shocks," Energy Policy, Elsevier, vol. 35(10), pages 4826-4838, October.
  5. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "Income tax deduction of commuting expenses in an urban CGE study: The case of German cities," Transport Policy, Elsevier, vol. 28(C), pages 11-27.
  6. Borck, Rainald & Wrede, Matthias, 2005. "Political economy of commuting subsidies," Journal of Urban Economics, Elsevier, vol. 57(3), pages 478-499, May.
  7. Tscharaktschiew, Stefan & Hirte, Georg, 2012. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 285-309.
  8. Avner, Paolo & Rentschler, Jun & Hallegatte, Stephane, 2014. "Carbon price efficiency : lock-in and path dependence in urban forms and transport infrastructure," Policy Research Working Paper Series 6941, The World Bank.
  9. De Borger, Bruno & Fosgerau, Mogens, 2008. "The trade-off between money and travel time: A test of the theory of reference-dependent preferences," Journal of Urban Economics, Elsevier, vol. 64(1), pages 101-115, July.
  10. Borck, Rainald & Wrede, Matthias, 2008. "Commuting subsidies with two transport modes," Journal of Urban Economics, Elsevier, vol. 63(3), pages 841-848, May.

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