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  4. October 2024
  5. Efficiency and Equity Impacts of Urban Transportation Policies with Equilibrium Sorting

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Efficiency and Equity Impacts of Urban Transportation Policies with Equilibrium Sorting

  • Panle Jia Barwick
  • Shanjun Li
  • Andrew Waxman
  • Jing Wu
  • Tianli Xia
American Economic Review
vol. 114, no. 10, October 2024
(pp. 3161–3205)
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Abstract

We estimate an equilibrium sorting model of housing location and commuting mode choice with endogenous traffic congestion to evaluate urban transportation policies. Leveraging fine-scale data from travel diaries and housing transactions identifying residents' home and work locations, we recover rich preference heterogeneity over both travel mode and residential location decisions. While different policies produce the same congestion reduction, their impacts on social welfare differ drastically. In addition, sorting undermines the congestion reduction under driving restrictions and subway expansion but strengthens it under congestion pricing. The combination of congestion pricing and subway expansion delivers the greatest congestion relief and efficiency gains.

Citation

Barwick, Panle Jia, Shanjun Li, Andrew Waxman, Jing Wu, and Tianli Xia. 2024. "Efficiency and Equity Impacts of Urban Transportation Policies with Equilibrium Sorting." American Economic Review, 114 (10): 3161–3205. DOI: 10.1257/aer.20220212

Additional Materials

JEL Classification

  • H76 State and Local Government: Other Expenditure Categories
  • O18 Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
  • P25 Socialist Systems and Transitional Economies: Urban, Rural, and Regional Economics
  • R23 Urban, Rural, Regional, Real Estate, and Transportation Economics: Regional Migration; Regional Labor Markets; Population; Neighborhood Characteristics
  • R31 Housing Supply and Markets
  • R41 Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
  • R48 Transportation Economics: Government Pricing and Policy