GENERAL EQUILIBRIUM VS. OPTIMUM, AND THE ALLOCATION OF LAND FOR TRANSPORTATION IN A CLOSED INFORMATION‐ORIENTED CITY WITH TRAFFIC CONGESTION

Hiroyuki Shibusawa and Yoshiro Higano

Papers in Regional Science, 1997, vol. 76, issue 3, 321-342

Abstract: ABSTRACT This paper presents a general equilibrium model of the closed city. The households residing in the suburbs are able to supply labor for the firms in the CBD not only by commuting which causes traffic congestion but also by telecom muting which needs an input of telecommunication services. The laissez‐faire equilibrium is compared with the optimum. We derive the equilibria by numerical computations using specific utility, production and congestion functions. The results show the allocation of land for transportation based on the social cost‐benefit rule, which is different from the allocation of Mills and de Ferranti (1971). This indicates that in the optimum market equilibrium which is maintained by both a congestion tax and subsidy, the city is rather more suburbanized than expected on the basis of previous studies.

Date: 1997
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https://doi.org/10.1111/j.1435-5597.1997.tb00695.x

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Persistent link: https://EconPapers.repec.org/RePEc:bla:presci:v:76:y:1997:i:3:p:321-342

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