Evaluating transport improvements in spatial equilibrium

Stephen Redding

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: The recent development of quantitative urban models provides a new set of tools for evaluating transport improvements. Conventional cost-benefit analyses are typically undertaken in partial equilibrium. In contrast, quantitative urban models characterize the spatial distribution of economic activity within cities in general equilibrium. We compare evaluations of a transport improvement using conventional cost-benefit analysis, sufficient statistics approaches based on changes in market access, and model-based counterfactuals. We show that quantitative urban models predict a reorganization of economic activity within cities in response to a transport improvement, which can lead to substantial differences between the predictions of these three approaches for large changes in transport costs.

Keywords: transportation; spatial economics; urban economics (search for similar items in EconPapers)
Date: 2025-02-26
New Economics Papers: this item is included in nep-geo and nep-tre
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