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Efficiency and Equity Impacts of Urban Transportation Policies with Equilibrium Sorting

Panle Barwick (pbarwick@wisc.edu), Shanjun Li, Andrew Waxman, Jing Wu (ireswujing@tsinghua.edu.cn) and Tianli Xia

American Economic Review, 2024, vol. 114, issue 10, 3161-3205

Abstract: We estimate an equilibrium sorting model of housing location and commuting mode choice with endogenous traffic congestion to evaluate urban transportation policies. Leveraging fine-scale data from travel diaries and housing transactions identifying residents' home and work locations, we recover rich preference heterogeneity over both travel mode and residential location decisions. While different policies produce the same congestion reduction, their impacts on social welfare differ drastically. In addition, sorting undermines the congestion reduction under driving restrictions and subway expansion but strengthens it under congestion pricing. The combination of congestion pricing and subway expansion delivers the greatest congestion relief and efficiency gains.

JEL-codes: H76 O18 P25 R23 R31 R41 R48 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1257/aer.20220212

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