A Quantitative System of Monocentric Metros
Federal Reserve Bank of Kansas City
Federal Reserve Bank of Kansas City Working Paper No. 14-03
The monocentric city framework is generalized to comprise a system of metros. A "representative" closed metro calibrates parameters and establishes a reservation utility and perimeter land price that must be matched by open metros. The open metros are assumed to have exogenous productivity below and above that in the representative metro. For a given level of productivity, transportation technology proves to be the most important quantitative determinant of population, land area, population density, and house prices across and within metros. Changes in highway capacity primarily affect these quantities while leaving commute speeds unchanged. Open metro land area asymptotes to a maximum at only moderately high relative productivity. Open metro land area and population fall to near zero at only moderately low relative productivity. Individuals with long commutes who are required to work a fixed number of hours have a marginal value of leisure time that is far above their wage. The framework yields a number of quantitative insights into how preferences, production technologies, and transportation technologies shape outcomes within and across metros.
Number of Pages in PDF File: 52
Keywords: Monocentric City, Urban Systems, Commuting Congestion, Value of Time
JEL Classification: R10, R41, C68
Date posted: April 5, 2014 ; Last revised: June 25, 2015