Subsidies for Intracity and Intercity Commuting

24 Pages Posted: 9 Jun 2008

See all articles by Rainald Borck

Rainald Borck

Humboldt University of Berlin - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Matthias Wrede

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: June 2008

Abstract

This paper analyzes subsidies for intracity and intercity commuting in an urban economics framework with two cities and agglomeration externalities, where workers may commute within and between cities. First, commuting subsidies serve to internalize agglomeration externalities: Intracity commuting subsidies give incentives to move to the larger city and intercity commuting subsidies make residents of the periphery commute to the core. Second, if agglomeration rents are locally captured, commuting subsidies act as a welfare enhancing transfer from the core to the periphery.

Keywords: commuting subsidies, agglomeration externalities, intercity and intracity commuting

JEL Classification: R14, R48

Suggested Citation

Borck, Rainald and Wrede, Matthias, Subsidies for Intracity and Intercity Commuting (June 2008). CESifo Working Paper Series No. 2321, Available at SSRN: https://ssrn.com/abstract=1142768

Rainald Borck

Humboldt University of Berlin - Faculty of Economics ( email )

Spandauer Strasse 1
D-10178 Berlin
Germany
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CESifo (Center for Economic Studies and Ifo Institute)

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Munich, DE-81679
Germany

Matthias Wrede (Contact Author)

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg - Institute of Economics ( email )

Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

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