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Urban Expansion or Clustered Deconcentration?

Author

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  • Wouter Vermeulen

    () (CPB Netherlands Bureau for Economic Policy Analysis, The Hague)

  • Jan Rouwendal

    () (VU University Amsterdam)

Abstract

How should urban containment and the diversion of households to nearby residential areas be evaluated from a welfare economic perspective? Assuming the existence of a negative externality of city size, we develop a concise general equilibrium model for a mother city and a satellite. This satellite should be founded if the gain in surplus exceeds the fixed costs of intercity infrastructure provision, and a Pigouvian tax on the conversion of land to urban use in both cities would then attain the first-best allocation. Rising incomes and falling transport costs enhance the surplus gain from ‘clustered deconcentration’, or the accommodation of growth in planned satellites, relative to expansion of the mother city. Nevertheless, plans by the Dutch government to uphold strict growth controls around Amsterdam, while fostering large-scale residential construction projects in the nearby satellite of Almere, are difficult to reconcile with the optimal policy in a calibrated version of our model.

Suggested Citation

  • Wouter Vermeulen & Jan Rouwendal, 2008. "Urban Expansion or Clustered Deconcentration?," Tinbergen Institute Discussion Papers 08-043/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20080043
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    References listed on IDEAS

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    More about this item

    Keywords

    land use regulation; growth controls; systems of cities; housing markets; applied general equilibrium;

    JEL classification:

    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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