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Subsidies for Intracity and Intercity Commuting

  • Rainald Borck
  • Matthias Wrede

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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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2321.

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Date of creation: 2008
Date of revision:
Handle: RePEc:ces:ceswps:_2321
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  1. Giles Duranton & Diego Puga, 2003. "Micro-Foundations of Urban Agglomeration Economies," NBER Working Papers 9931, National Bureau of Economic Research, Inc.
  2. Stefan Bach, 2003. "Entfernungspauschale: Kürzung gerechtfertigt," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 70(40), pages 602-608.
  3. 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).
  4. Borck, Rainald & Wrede, Matthias, 2008. "Commuting subsidies with two transport modes," Journal of Urban Economics, Elsevier, vol. 63(3), pages 841-848, May.
  5. Rainald Borck & Matthias Wrede, 2004. "Political Economy of Commuting Subsidies," Discussion Papers of DIW Berlin 445, DIW Berlin, German Institute for Economic Research.
  6. Jan K. Brueckner, 2003. "Transport Subsidies, System Choice, and Urban Sprawl," CESifo Working Paper Series 1090, CESifo Group Munich.
  7. Daniel J. Graham, 2007. "Agglomeration Economies and Transport Investment," OECD/ITF Joint Transport Research Centre Discussion Papers 2007/11, OECD Publishing.
  8. Zax, Jeffrey S., 1991. "Compensation for commutes in labor and housing markets," Journal of Urban Economics, Elsevier, vol. 30(2), pages 192-207, September.
  9. 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.
  10. Henderson, J V, 1974. "The Sizes and Types of Cities," American Economic Review, American Economic Association, vol. 64(4), pages 640-56, September.
  11. Richard Arnott, 2007. "Congestion Tolling with Agglomeration Externalities," Boston College Working Papers in Economics 660, Boston College Department of Economics.
  12. 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.
  13. Zenou, Yves, 2000. "Urban unemployment, agglomeration and transportation policies," Journal of Public Economics, Elsevier, vol. 77(1), pages 97-133, July.
  14. 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.
  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. Michel, P. & Perrot, A. & Thisse, J.-F., . "Interregional equilibrium with heterogeneous labor," CORE Discussion Papers RP 1194, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  17. Rappaport, Jordan, 2008. "A productivity model of city crowdedness," Journal of Urban Economics, Elsevier, vol. 63(2), pages 715-722, March.
  18. Van Ommeren, Jos & Fosgerau, Mogens, 2009. "Workers' marginal costs of commuting," Journal of Urban Economics, Elsevier, vol. 65(1), pages 38-47, January.
  19. Arnott, Richard J & Stiglitz, Joseph E, 1981. "Aggregate Land Rents and Aggregate Transport Costs," Economic Journal, Royal Economic Society, vol. 91(362), pages 331-47, June.
  20. 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.
  21. Wrede, Matthias, 2001. "Should Commuting Expenses Be Tax Deductible? A Welfare Analysis," Journal of Urban Economics, Elsevier, vol. 49(1), pages 80-99, January.
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