Congestion, Agglomeration, and the Structure of Cities

54 Pages Posted: 2 Jun 2016

See all articles by Jeffrey Brinkman

Jeffrey Brinkman

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Multiple version iconThere are 2 versions of this paper

Date Written: 2016-05-10

Abstract

Supersede WP 13-25. Congestion costs in urban areas are significant and clearly represent a negative externality. Nonetheless, economists also recognize the production advantages of urban density in the form of positive agglomeration externalities. The long-run equilibrium outcomes in economies with multiple correlated but o setting externalities have yet to be fully explored in the literature. Therefore, I develop a spatial equilibrium model of urban structure that includes both congestion costs and agglomeration externalities. I then estimate the structural parameters of the model using a computational algorithm to match the spatial distribution of employment, population, land use, land rents, and commute times in the data. Policy simulations based on the estimates suggest that congestion pricing may have ambiguous consequences for economic welfare.

Keywords: Congestion, Agglomeration, Externalities, Spatial Equilibrium, Urban Structure, Estimation

JEL Classification: C51, D62, R13, R40

Suggested Citation

Brinkman, Jeffrey, Congestion, Agglomeration, and the Structure of Cities (2016-05-10). FRB of Philadelphia Working Paper No. 16-13, Available at SSRN: https://ssrn.com/abstract=2788462

Jeffrey Brinkman (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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