Urban Expansion or Clustered Deconcentration?

Wouter Vermeulen () and Jan Rouwendal
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Wouter Vermeulen: CPB Netherlands Bureau for Economic Policy Analysis, The Hague

No 08-043/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: How should urban containment and the diversion of households to nearby residential areas be evaluated from a welfare economic perspective? Assuming the existence of a negative externality of city size, we develop a concise general equilibrium model for a mother city and a satellite. This satellite should be founded if the gain in surplus exceeds the fixed costs of intercity infrastructure provision, and a Pigouvian tax on the conversion of land to urban use in both cities would then attain the first-best allocation. Rising incomes and falling transport costs enhance the surplus gain from ‘clustered deconcentration’, or the accommodation of growth in planned satellites, relative to expansion of the mother city. Nevertheless, plans by the Dutch government to uphold strict growth controls around Amsterdam, while fostering large-scale residential construction projects in the nearby satellite of Almere, are difficult to reconcile with the optimal policy in a calibrated version of our model.

Keywords: land use regulation; growth controls; systems of cities; housing markets; applied general equilibrium (search for similar items in EconPapers)
JEL-codes: R13 R14 R52 (search for similar items in EconPapers)
Date: 2008-04-18
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Citations: View citations in EconPapers (3)

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