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Subsidies for Intracity and Intercity Commuting

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  • Rainald Borck
  • Matthias Wrede

Abstract

This paper analyzes subsidies for intracity and intercity commuting in an urban economics framework with two cities and agglomeration externalities, where workers may commute within and between cities. First, commuting subsidies serve to internalize agglomeration externalities: Intracity commuting subsidies give incentives to move to the larger city and intercity commuting subsidies make residents of the periphery commute to the core. Second, if agglomeration rents are locally captured, commuting subsidies act as a welfare enhancing transfer from the core to the periphery.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2008/wp-cesifo-2008-06/cesifo1_wp2321.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2321.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2321

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Keywords: commuting subsidies; agglomeration externalities; intercity and intracity commuting;

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References

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  1. Borck, Rainald & Wrede, Matthias, 2008. "Commuting subsidies with two transport modes," Journal of Urban Economics, Elsevier, vol. 63(3), pages 841-848, May.
  2. Rainald Borck & Matthias Wrede, 2004. "Political Economy of Commuting Subsidies," CESifo Working Paper Series, CESifo Group Munich 1339, CESifo Group Munich.
  3. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, Econometric Society, vol. 73(4), pages 1367-1382, 07.
  4. J.V. Henderson, 1972. "The Sizes and Types of Cities," Working Papers, Queen's University, Department of Economics 75, Queen's University, Department of Economics.
  5. Myers & G.M., 1989. "Optimality, Free Mobility And The Regional Authority In Federation," Working Papers, John Deutsch Institute for the Study of Economic Policy 10, John Deutsch Institute for the Study of Economic Policy.
  6. Arnott, Richard J & Stiglitz, Joseph E, 1981. "Aggregate Land Rents and Aggregate Transport Costs," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 91(362), pages 331-47, June.
  7. Stefan Bach, 2003. "Entfernungspauschale: Kürzung gerechtfertigt," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 70(40), pages 602-608.
  8. Richard Arnott, 2007. "Congestion Tolling with Agglomeration Externalities," Boston College Working Papers in Economics, Boston College Department of Economics 660, Boston College Department of Economics.
  9. Brueckner, Jan K., 2005. "Transport subsidies, system choice, and urban sprawl," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 35(6), pages 715-733, November.
  10. Borck, Rainald & Pflüger, Michael P. & Wrede, Matthias, 2007. "A Simple Theory of Industry Location and Residence Choice," IZA Discussion Papers 2862, Institute for the Study of Labor (IZA).
  11. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, Elsevier, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
  12. Wrede, Matthias, 2001. "Should Commuting Expenses Be Tax Deductible? A Welfare Analysis," Journal of Urban Economics, Elsevier, vol. 49(1), pages 80-99, January.
  13. Matthias Wrede, 2000. "Tax Deductibility of Commuting Expenses and Leisures: On the Tax Treatment of Time-Saving Expenditure," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, Mohr Siebeck, Tübingen, vol. 57(2), pages 216-, March.
  14. Zenou, Yves, 2000. "Urban unemployment, agglomeration and transportation policies," Journal of Public Economics, Elsevier, Elsevier, vol. 77(1), pages 97-133, July.
  15. Abdel-Rahman, Hesham M. & Anas, Alex, 2003. "Theories of system of cities," Working Papers, University of New Orleans, Department of Economics and Finance 2003-08, University of New Orleans, Department of Economics and Finance.
  16. Erik T. Verhoef & Peter Nijkamp, 2003. "Externalities in the Urban Economy," Tinbergen Institute Discussion Papers, Tinbergen Institute 03-078/3, Tinbergen Institute.
  17. Philippe Michel & Anne Perrot & Jacques-François Thisse, 1996. "Interregional equilibrium with heterogeneous labor," Journal of Population Economics, Springer, Springer, vol. 9(1), pages 95-113, February.
  18. Daniel J. Graham, 2007. "Agglomeration Economies and Transport Investment," OECD/ITF Joint Transport Research Centre Discussion Papers, OECD Publishing 2007/11, OECD Publishing.
  19. Van Ommeren, Jos & Fosgerau, Mogens, 2009. "Workers' marginal costs of commuting," Journal of Urban Economics, Elsevier, vol. 65(1), pages 38-47, January.
  20. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, Elsevier, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
  21. Rappaport, Jordan, 2008. "A productivity model of city crowdedness," Journal of Urban Economics, Elsevier, vol. 63(2), pages 715-722, March.
  22. Zax, Jeffrey S., 1991. "Compensation for commutes in labor and housing markets," Journal of Urban Economics, Elsevier, vol. 30(2), pages 192-207, September.
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Citations

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Cited by:
  1. Zenou, Yves, 2010. "Search, Migration, and Urban Land Use: The Case of Transportation Policies," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8110, C.E.P.R. Discussion Papers.
  2. Gutiérrez-i-Puigarnau, Eva & van Ommeren, Jos N., 2010. "Labour supply and commuting," Journal of Urban Economics, Elsevier, vol. 68(1), pages 82-89, July.
  3. Georg Hirte & Stefan Tscharaktschiew, 2011. "Income tax deduction of commuting expenses and tax funding in an urban CGE study: the case of German cities," ERSA conference papers ersa11p274, European Regional Science Association.
  4. 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, Elsevier, vol. 46(2), pages 285-309.
  5. Toon Vandyck & Stef Proost, 2012. "Inefficiencies in regional commuting policy," Papers in Regional Science, Wiley Blackwell, Wiley Blackwell, vol. 91(3), pages 659-689, 08.
  6. Michael J. Boehm, 2013. "Concentration Versus Re-Matching? Evidence About the Locational Effects of Commuting Costs," CEP Discussion Papers, Centre for Economic Performance, LSE dp1207, Centre for Economic Performance, LSE.
  7. Woohyung Lee & Byeongho Choe, 2012. "Agglomeration effect and tax competition in the metropolitan area," The Annals of Regional Science, Springer, Springer, vol. 49(3), pages 789-803, December.
  8. Evangelinos, Christos, 2013. "Interessengruppen und Preissetzung im Verkehr," Discussion Papers, Dresden University of Technology, Faculty of Transportation and Traffic Sciences "Friedrich List", Institute for Transport and Economics 2/2013, Dresden University of Technology, Faculty of Transportation and Traffic Sciences "Friedrich List", Institute for Transport and Economics.
  9. Michael J. Boehm, 2013. "Concentration versus re-matching? Evidence about the locational effects of commuting costs," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 51542, London School of Economics and Political Science, LSE Library.
  10. 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.

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