Mode choice and railway subsidy in a congested monocentric city with endogenous population distribution

The objective of this paper is to provide new insights into commuters’ mode choice behavior in a monocentric closed city with endogenous population distribution, where a congested highway and a crowded railway provide commuting services for residents on a linear urban corridor. We first explore the typical equilibrium mode-choice patterns with exogenous city boundary and population distribution, and then incorporate the residents’ mode choice into an urban spatial equilibrium model, in which the residents’ household consumption, the residential location choice and the property developers’ housing production are also explicitly modeled. Using comparative static analysis, we find that the urban corridor expands with the increase of railway fare if there is no congestion in the bimodal transportation system, but it’s not necessarily the case if highway congestion and transit crowding cannot be ignored. We provide numerical evidence to show that the urban corridor possibly shrinks with the increase of railway fare once congestion effects are considered. We also discuss the changes of urban form, utility level of residents and social welfare with different railway fare and subsidy policies. Numerical results show that the distance-based fare policy with low subsidy should be preferred because it can realize the Pareto-improved social welfare and utility level of residents.