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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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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2321.

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Date of creation: 2008
Date of revision:
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. 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, vol. 57(2), pages 216-, March.
  2. Michel, P. & Perrot, A. & Thisse, J.-F., . "Interregional equilibrium with heterogeneous labor," CORE Discussion Papers RP -1194, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Jordan Rappaport, 2006. "A productivity model of city crowdedness," Research Working Paper RWP 06-06, Federal Reserve Bank of Kansas City.
  4. Arnott, Richard J & Stiglitz, Joseph E, 1981. "Aggregate Land Rents and Aggregate Transport Costs," Economic Journal, Royal Economic Society, vol. 91(362), pages 331-47, June.
  5. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," 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 49, pages 2119-2171 Elsevier.
  6. Daniel J. Graham, 2007. "Agglomeration Economies and Transport Investment," OECD/ITF Joint Transport Research Centre Discussion Papers 2007/11, OECD Publishing.
  7. Borck, Rainald & Wrede, Matthias, 2005. "Political economy of commuting subsidies," Journal of Urban Economics, Elsevier, vol. 57(3), pages 478-499, May.
  8. Arnott, Richard, 2007. "Congestion tolling with agglomeration externalities," Journal of Urban Economics, Elsevier, vol. 62(2), pages 187-203, September.
  9. Brueckner, Jan K., 2005. "Transport subsidies, system choice, and urban sprawl," Regional Science and Urban Economics, Elsevier, vol. 35(6), pages 715-733, November.
  10. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October.
  11. Borck, Rainald & Wrede, Matthias, 2008. "Commuting subsidies with two transport modes," Journal of Urban Economics, Elsevier, vol. 63(3), pages 841-848, May.
  12. Giles Duranton & Diego Puga, 2003. "Micro-Foundations of Urban Agglomeration Economies," NBER Working Papers 9931, National Bureau of Economic Research, Inc.
  13. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-56, September.
  14. Abdel-Rahman, Hesham M. & Anas, Alex, 2004. "Theories of systems of cities," 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 52, pages 2293-2339 Elsevier.
  15. Rainald Borck & Michael Pflüger & Matthias Wrede, 2010. "A simple theory of industry location and residence choice," Journal of Economic Geography, Oxford University Press, vol. 10(6), pages 913-940, November.
  16. Van Ommeren, Jos & Fosgerau, Mogens, 2009. "Workers' marginal costs of commuting," Journal of Urban Economics, Elsevier, vol. 65(1), pages 38-47, January.
  17. Wrede, Matthias, 2001. "Should Commuting Expenses Be Tax Deductible? A Welfare Analysis," Journal of Urban Economics, Elsevier, vol. 49(1), pages 80-99, January.
  18. Zenou, Yves, 1999. "Urban Unemployment, Agglomeration and Transportation Policies," CEPR Discussion Papers 2309, C.E.P.R. Discussion Papers.
  19. Stefan Bach, 2003. "Entfernungspauschale: Kürzung gerechtfertigt," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 70(40), pages 602-608.
  20. Zax, Jeffrey S., 1991. "Compensation for commutes in labor and housing markets," Journal of Urban Economics, Elsevier, vol. 30(2), pages 192-207, September.
  21. Erik T. Verhoef & Peter Nijkamp, 2003. "Externalities in the Urban Economy," Tinbergen Institute Discussion Papers 03-078/3, Tinbergen Institute.
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Citations

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Cited by:
  1. Michael J. Boehm, 2013. "Concentration Versus Re-Matching? Evidence About the Locational Effects of Commuting Costs," CEP Discussion Papers dp1207, Centre for Economic Performance, LSE.
  2. Woohyung Lee & Byeongho Choe, 2012. "Agglomeration effect and tax competition in the metropolitan area," The Annals of Regional Science, Springer, vol. 49(3), pages 789-803, December.
  3. Zenou, Yves, 2010. "Search, Migration, and Urban Land Use: The Case of Transportation Policies," IZA Discussion Papers 5312, Institute for the Study of Labor (IZA).
  4. Eva Gutiérrez-i-Puigarnau & Jos van Ommeren, 2009. "Labour Supply and Commuting," SOEPpapers on Multidisciplinary Panel Data Research 222, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Tscharaktschiew, Stefan & Hirte, Georg, 2011. "Should subsidies to urban passenger transport be increased? A spatial CGE analysis for a German metropolitan area," Dresden Discussion Paper Series in Economics 01/11, Dresden University of Technology, Faculty of Business and Economics, Department of Economics.
  6. 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.
  7. Michael J. Boehm, 2013. "Concentration versus re-matching? Evidence about the locational effects of commuting costs," LSE Research Online Documents on Economics 51542, London School of Economics and Political Science, LSE Library.
  8. Toon Vandyck & Stef Proost, 2011. "Regional government competition and incentives for commuting taxes and transport investments," ERSA conference papers ersa11p892, European Regional Science Association.
  9. 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.
  10. Evangelinos, Christos, 2013. "Interessengruppen und Preissetzung im Verkehr," Discussion Papers 2/2013, Dresden University of Technology, Faculty of Transportation and Traffic Sciences "Friedrich List", Institute for Transport and Economics.

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