Offsetting the CO2 locked-in by roads: Suburban transit and core densification as antidotes

Roads alleviate congestion, speed up traffic and lower CO2 in the intensive margin. This attracts more car-trips in the extensive margin. The combined effect often increases fuel used and CO2. How well can public transit offset the higher emissions caused by new roads? In a simple core-periphery model of Beijing, CO2 from road expansion in the periphery is difficult to alleviate by improving transit in the urban core, because (i) choice of car in the core is not elastic enough to bus travel time; (ii) trips are drawn from car to bus, reducing CO2, but trips are also drawn from walking and bicycling to bus, diluting the gains. Reducing core roads or making transit in the periphery faster draws population to the less congested periphery. These policies add to urban sprawl, but offset CO2 from cars more effectively. We show that both policies are more effective in compact cities in which cores are denser or when gasoline prices are much higher.