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Subsidies for intracity and intercity commuting

  • Borck, Rainald
  • Wrede, Matthias

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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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 66 (2009)
Issue (Month): 1 (July)
Pages: 25-32

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Handle: RePEc:eee:juecon:v:66:y:2009:i:1:p:25-32
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  1. Zax, Jeffrey S., 1991. "Compensation for commutes in labor and housing markets," Journal of Urban Economics, Elsevier, vol. 30(2), pages 192-207, September.
  2. 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.
  3. Richard Arnott, 2007. "Congestion Tolling with Agglomeration Externalities," Boston College Working Papers in Economics 660, Boston College Department of Economics.
  4. 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).
  5. Rappaport, Jordan, 2008. "A productivity model of city crowdedness," Journal of Urban Economics, Elsevier, vol. 63(2), pages 715-722, March.
  6. van Ommeren, Jos & Fosgerau, Mogens, 2008. "Workers' marginal costs of commuting," MPRA Paper 12010, University Library of Munich, Germany.
  7. Duranton, Gilles & Puga, Diego, 2003. "Microfoundations of Urban Agglomeration Economies," CEPR Discussion Papers 4062, C.E.P.R. Discussion Papers.
  8. J.V. Henderson, 1972. "The Sizes and Types of Cities," Working Papers 75, Queen's University, Department of Economics.
  9. Stefan Bach, 2003. "Entfernungspauschale: Kürzung gerechtfertigt," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 70(40), pages 602-608.
  10. Richard J. Arnott & Joseph E. Stiglitz, 1980. "Aggregate Land Rents and Aggregate Transport Costs," NBER Working Papers 0523, National Bureau of Economic Research, Inc.
  11. Zenou, Yves, 1999. "Urban Unemployment, Agglomeration and Transportation Policies," CEPR Discussion Papers 2309, C.E.P.R. Discussion Papers.
  12. Rainald Borck & Matthias Wrede, 2004. "Political Economy of Commuting Subsidies," Discussion Papers of DIW Berlin 445, DIW Berlin, German Institute for Economic Research.
  13. Jan K. Brueckner, 2003. "Transport Subsidies, System Choice, and Urban Sprawl," CESifo Working Paper Series 1090, CESifo Group Munich.
  14. Borck, Rainald & Wrede, Matthias, 2008. "Commuting subsidies with two transport modes," Journal of Urban Economics, Elsevier, vol. 63(3), pages 841-848, May.
  15. Kenneth A. Small & Clifford Winston & Jia Yan, 2005. "Uncovering the Distribution of Motorists' Preferences for Travel Time and Reliability," Econometrica, Econometric Society, vol. 73(4), pages 1367-1382, 07.
  16. Philippe Michel & Anne Perrot & Jacques-François Thisse, 1996. "Interregional equilibrium with heterogeneous labor," Journal of Population Economics, Springer, vol. 9(1), pages 95-113, February.
  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. Myers & G.M., 1989. "Optimality, Free Mobility And The Regional Authority In Federation," Working Papers 10, John Deutsch Institute for the Study of Economic Policy.
  19. Abdel-Rahman, Hesham M. & Anas, Alex, 2003. "Theories of system of cities," Working Papers 2003-08, University of New Orleans, Department of Economics and Finance.
  20. 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.
  21. Daniel J. Graham, 2007. "Agglomeration Economies and Transport Investment," OECD/ITF Joint Transport Research Centre Discussion Papers 2007/11, OECD Publishing.
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