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Congestion, Agglomeration, and the Structure of Cities

Jeffrey Brinkman

No 16-13, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: Supersede WP 13-25. Congestion costs in urban areas are significant and clearly represent a negative externality. Nonetheless, economists also recognize the production advantages of urban density in the form of positive agglomeration externalities. The long-run equilibrium outcomes in economies with multiple correlated but o setting externalities have yet to be fully explored in the literature. Therefore, I develop a spatial equilibrium model of urban structure that includes both congestion costs and agglomeration externalities. I then estimate the structural parameters of the model using a computational algorithm to match the spatial distribution of employment, population, land use, land rents, and commute times in the data. Policy simulations based on the estimates suggest that congestion pricing may have ambiguous consequences for economic welfare.

Keywords: Congestion; Agglomeration; Externalities; Spatial Equilibrium; Urban Structure; Estimation (search for similar items in EconPapers)
JEL-codes: C51 D62 R13 R40 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-geo and nep-ure
Date: 2016-05-10
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Journal Article: Congestion, agglomeration, and the structure of cities (2016) Downloads
Working Paper: Congestion, agglomeration, and the structure of cities (2013)
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