Impact of personal vehicle emission tax policy and Pareto-improving strategies on travel and urban performance

Personal vehicle emission taxes (PVET) are attractive for reducing congestion and emissions, yet they often face political resistance because households perceive welfare losses—especially among long-distance suburban commuters. We develop an integrated welfare–transport–land-use equilibrium model for a core–suburb monocentric city with peak-hour highway bottleneck congestion and railway crowding, in which commuters jointly choose residence, mode, and departure time under PVET. The framework clarifies a structural coordination problem: PVET is effective in reducing highway traffic, emissions, and suburban land use, but it also lowers equilibrium utility by raising generalized commuting costs. We then compare three transport-based compensation instruments—highway capacity expansion, transit fare subsidies, and headway reductions—under a weak-versus-strong Pareto criterion. Transport-only compensation can restore (or even raise) welfare, but it tends to relax the city boundary, making welfare improvements and suburban expansion move together. Introducing a suburban land tax changes the frontier by acting directly on the land-use margin: when paired with PVET and a transport instrument, it opens a strong-Pareto corridor in which welfare is strictly higher and the suburban boundary is strictly smaller than in the baseline, with a subset delivering simultaneous welfare gains, spatial compaction, and emission reductions (“triple-win”). A case study of the Beijing–Langfang commuting corridor illustrates how these coordinated policy packages provide an illustrative basis for policy comparison and quantify the attainable improvements in welfare, urban sprawl, and emissions.