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Behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs

François Gusdorf () and Stephane Hallegatte ()
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François Gusdorf: CIRED - Centre international de recherche sur l'environnement et le développement - ENGREF - Ecole Nationale du Génie Rural, des Eaux et des Forêts - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper investigates the consequences of a sudden increase in transportation costs when households behaviors and buildings inertia are accounted for. A theoretical framework is proposed, capturing the interactions between behaviors, transportation costs and urban structure. It is found that changes in households consumption and housing choices reduce significantly the long-term adverse effects of a shock in transportation costs. Indeed, the shock translates, over the long-run, into a more concentrated housing that limits households utility losses and maintains landowners' income. But, because of buildings inertia, the shock leads first to a long transition, during which the adjustment is constrained by a suboptimal housing-supply structure. Then, households support larger losses than in the final stage, though lower than with no adjustment at all, and landowners experience a large decrease in their aggregate income and an important redistribution of wealth. Negative transitional effects grow as the shock becomes larger. Thus, behaviors and buildings inertia are key factors in determining the vulnerability to transportation price variability and to the introduction of climate policies. Our policy conclusions are that: (i) if a long-term increase in transportation costs is unavoidable because of climate change or resource scarcity, a smooth change, starting as early as possible, must be favored; and (ii) fast-growing cities of the developing world can reduce their future vulnerability to shocks in transportation costs through the implementation of policies that limit urban sprawl.

Keywords: City; Housing; Transportation (search for similar items in EconPapers)
Date: 2006-09-20
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00096936v2
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Journal Article: Behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs (2007) Downloads
Working Paper: Behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs (2007)
Working Paper: Behaviors and housing inertia are key factors in determining the consequences of a shock in transportation costs (2006) Downloads
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