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Congestion and Transportation

Paper Session

Saturday, Jan. 6, 2018 10:15 AM - 12:15 PM

Loews Philadelphia, Washington B
Hosted By: American Real Estate and Urban Economics Association
  • Chair: Jan K. Brueckner, University of California-Irvine

The Cost of Congestion and the Benefits of Congestion Pricing in the Greater Los Angeles Region

Alex Anas
State University of New York-Buffalo


The benefits of congestion pricing policies are examined with a spatially detailed general equilibrium model of the greater LA region. The model includes choices of roads on a network, of driving or public transit, of residence location, of non-work trips patterns, of housing type and size; vacancies and new construction, production, interindustry trade and exports. Workers work a fixed number of days per year and hours per day but choose where to work. The aggregate benefits of pricing LA County roads increase 2.7 fold when the toll revenue is used to cut the income tax of the poorer LA County workers, but changes negligibly when the toll revenue is used to cut sales or property taxes. With the income tax cut, more than two thirds of the benefits go to consumers, and a third to landlords, while importers from other regions lose. With the sales tax cut, consumers, importers and landlords benefit more evenly, and with the property tax cut almost all gains are capitalized into values.

Do Gasoline Prices Affect Residential Property Values?

Edward Coulson
University of California-Irvine
Adele Morris
Brookings Institution
Helen Neill
University of Nevada-Las Vegas


We construct a new version of the standard monocentric city model that recognizes the asymmetry of expansions and contractions of the urban area in the fact of changing transportation costs. We use data from the Las Vegas metro area to test the implications of the model, and find our qualitative predictions confirmed in all respects. However, simulating the effect of a 10% increase in gas prices (as from a carbon tax) we find that households overcapitalize changes in transportation costs, a finding similar to that of Coulson and Engle (1987).

The Economics of Speed: The Electrification of the Streetcar System and the Decline of Mom-and-Pop Stores in Boston, 1885-1905

Wei You
New York University


Small family firms dominated the American economy in the nineteenth century, and still dominate in many developing economies today. A long-conjectured cause of this phenomenon, represented by Chandler (1977), is that market segmentation due to underdeveloped transportation technology precludes the emergence of modern firms. This paper provides the first rigorous test of this hypothesis, exploiting the natural experiment from Boston's quick electrication of its previously horse-drawn streetcar system between 1889 and 1896 while keeping the pre-existing transit routes almost unchanged. Analyzing new data digitized from Boston business records from 1885 to 1905, I find evidence in support of this hypothesis.

Do HOV Lanes Save Energy? Evidence from a General Equilibrium Model of the City

Weihua Zhao
University of Louisville


High-occupancy vehicle(HOV) lanes have been promoted to encourage carpools, reduce traffic congestion, save energy, and improve air quality. At the partial equilibrium level, commuting with three workers per automobile clearly uses less energy and reduces highway congestion compared to three single drivers. This paper develops a numerical urban simulation model to generate the general equilibrium effects of HOV lanes on urban spatial structure, energy use, and greenhouse gas emissions. The major findings are that HOV lanes reduce the cost of long distance commuting and lower commuting energy consumption. However, the reduction in transportation costs induces urban sprawl, which results in higher dwelling and numeraire good energy consumption. Overall, the introduction of HOV lanes has little effect on total energy consumption. This is another classic case of general equilibrium effects reversing the partial equilibrium effects of an urban policy. In contrast, an alternative policy that imposing congestion tolls is more effective in reducing energy consumption and preventing urban sprawl.
William Larson
U.S. Federal Housing Finance Agency
Raven Molloy
Federal Reserve Board
Leah Brooks
George Washington University
Richard Arnott
University of California-Riverside
JEL Classifications
  • R1 - General Regional Economics