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Optimal regulation on building size and city boundary: An effective second-best remedy for traffic congestion externality

  • Kono, Tatsuhito
  • Joshi, Kirti Kusum
  • Kato, Takeaki
  • Yokoi, Takahisa

This paper numerically evaluates the efficiency of regulations on building size and city size in a congested closed city by comparing welfare gain with that achieved under a first-best toll regime. Results show that whereas the urban growth boundary (UGB) is a poor substitute for the toll regime as expected, an optimal regulation on building size in the presence of a suitably chosen UGB yields significant welfare gain, producing an effective substitute for a first-best toll regime. Moreover, the optimal regulation on the building size requires not only downward adjustment to the market population density at the boundary locations but also upward adjustment at the central locations.

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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 42 (2012)
Issue (Month): 4 ()
Pages: 619-630

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Handle: RePEc:eee:regeco:v:42:y:2012:i:4:p:619-630
Contact details of provider: Web page: http://www.elsevier.com/locate/regec

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  1. King, David & Manville, Michael & Shoup, Donald, 2007. "The political calculus of congestion pricing," Transport Policy, Elsevier, vol. 14(2), pages 111-123, March.
  2. Joshi, Kirti Kusum & Kono, Tatsuhito, 2009. "Optimization of floor area ratio regulation in a growing city," Regional Science and Urban Economics, Elsevier, vol. 39(4), pages 502-511, July.
  3. Jan K. Brueckner, 2005. "Urban Growth Boundaries: An Effective Second-Best Remedy for Unpriced Traffic Congestion?," Working Papers 050610, University of California-Irvine, Department of Economics.
  4. Bertaud, Alain & Brueckner, Jan K., 2005. "Analyzing building-height restrictions: predicted impacts and welfare costs," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 109-125, March.
  5. Richard Arnott & James G. MacKinnon, 1976. "Measuring the Costs of Height Restrictions with a General Equilibrium Model," Working Papers 242, Queen's University, Department of Economics.
  6. Arnott, Richard J., 1979. "Unpriced transport congestion," Journal of Economic Theory, Elsevier, vol. 21(2), pages 294-316, October.
  7. Kanemoto, Yoshitsugu, 1977. "Cost-benefit analysis and the second best land use for transportation," Journal of Urban Economics, Elsevier, vol. 4(4), pages 483-503, October.
  8. Rouwendal, Jan & Verhoef, Erik T., 2006. "Basic economic principles of road pricing: From theory to applications," Transport Policy, Elsevier, vol. 13(2), pages 106-114, March.
  9. Harberger, Arnold C, 1971. "Three Basic Postulates for Applied Welfare Economics: An Interpretive Essay," Journal of Economic Literature, American Economic Association, vol. 9(3), pages 785-97, September.
  10. Lin, C.-C.Chu-Chia & Mai, Chao-Cheng & Wang, Ping, 2004. "Urban land policy and housing in an endogenously growing monocentric city," Regional Science and Urban Economics, Elsevier, vol. 34(3), pages 241-261, May.
  11. King, David & Manville, Michael & Shoup, Donald, 2007. "The political calculus of congestion pricing," University of California Transportation Center, Working Papers qt9js9z8gz, University of California Transportation Center.
  12. Tatsuhito Kono & Takayuki Kaneko & Hisa Morisugi, 2010. "Necessity of minimum floor area ratio regulation: a second-best policy," The Annals of Regional Science, Springer, vol. 44(3), pages 523-539, June.
  13. Anas, Alex & Pines, David, 2008. "Anti-sprawl policies in a system of congested cities," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 408-423, September.
  14. Wheaton, William C., 1998. "Land Use and Density in Cities with Congestion," Journal of Urban Economics, Elsevier, vol. 43(2), pages 258-272, March.
  15. Arnott, Richard J & MacKinnon, James G, 1978. "Market and Shadow Land Rents with Congestion," American Economic Review, American Economic Association, vol. 68(4), pages 588-600, September.
  16. Pines, David & Sadka, Efraim, 1985. "Zoning, first-best, second-best, and third-best criteria for allocating land for roads," Journal of Urban Economics, Elsevier, vol. 17(2), pages 167-183, March.
  17. Anas, Alex & Rhee, Hyok-Joo, 2007. "When are urban growth boundaries not second-best policies to congestion tolls?," Journal of Urban Economics, Elsevier, vol. 61(2), pages 263-286, March.
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