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The optimal pricing, finance and supply of urban transportation in general equilibrium: A theoretical exposition

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  • Anas, Alex

Abstract

We present a general equilibrium framework of optimal allocation treating the pricing, finance and supply of urban transportation. Uncongested public transportation technology with economies of scale supports the city's existence; and a congested road system subject to constant returns limits urban size. Optimal investment in public transit and in roads follow Samuelson's rule. With optimally determined urban population, roads are fully financed by Pigouvian congestion tolls while aggregate differential land rents fully finance public transit and any other activity with internal or external economies of scale (Henry George Theorem). Marshallian agglomeration from production in the core and the suburbanization of jobs to avoid congestion are treated. We also see how the optimal rules and the Henry George Theorem are modified when the demand for location is determined by a random utility model.

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  • Anas, Alex, 2012. "The optimal pricing, finance and supply of urban transportation in general equilibrium: A theoretical exposition," Economics of Transportation, Elsevier, vol. 1(1), pages 64-76.
  • Handle: RePEc:eee:ecotra:v:1:y:2012:i:1:p:64-76
    DOI: 10.1016/j.ecotra.2012.05.001
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    References listed on IDEAS

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    1. repec:eee:ecotra:v:11-12:y:2017:i::p:1-14 is not listed on IDEAS
    2. Zhang, Wenjia & Kockelman, Kara M., 2016. "Optimal policies in cities with congestion and agglomeration externalities: Congestion tolls, labor subsidies, and place-based strategies," Journal of Urban Economics, Elsevier, vol. 95(C), pages 64-86.
    3. Locatelli, Giorgio & Invernizzi, Diletta Colette & Brookes, Naomi J., 2017. "Project characteristics and performance in Europe: An empirical analysis for large transport infrastructure projects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 98(C), pages 108-122.
    4. Christophe Heyndrickx & Stef Proost, 2013. "Language and political power in the urban model: an application to Brussels," ERSA conference papers ersa13p994, European Regional Science Association.
    5. Ioannis Tikoudis, 2015. "Congestion Pricing in Urban Polycentric Networks with Distorted Labor Markets: A Spatial General Equilibrium Model for the Area Randstad," Tinbergen Institute Discussion Papers 15-085/VIII, Tinbergen Institute, revised 26 Oct 2017.
    6. Hirte, Georg & Rhee, Hyok-Joo, 2016. "Regulation versus Taxation," CEPIE Working Papers 05/16, Technische Universität Dresden, Center of Public and International Economics (CEPIE).
    7. Hirte, Georg & Tscharaktschiew, Stefan, 2013. "The optimal subsidy on electric vehicles in German metropolitan areas: A spatial general equilibrium analysis," Energy Economics, Elsevier, vol. 40(C), pages 515-528.

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