Parking, Transit, and Employment in a Cbd
Posted: 15 Nov 1996
Date Written: December 1995
In this paper we present a general equilibrium model to examine the role of parking and transit subsidy policy on CBD size, CBD land values, and the market shares of cars and transit. The three main features of the model are: 1) agglomeration economies increase continuously with labor market size; 2) congestion arises from auto use only; transit is noncongestible; 3) locational equilibrium is maintained in the sense that firms and individuals cannot reduce costs or increase utility by moving, given equilibrium prices and city size. We derive the conditions under which parking taxes can be levied and used to subsidize transit and increase equilibrium CBD size and land values. We compute an optimal parking tax that maximizes CBD size and land values and derive relationships among parking taxes, transit use, and congestion. We find nonmonotonic relationships among parking taxes, land values, and transit use. The views expressed here are solely those of the author and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or of the Federal Reserve System.
JEL Classification: R12, R41
Suggested Citation: Suggested Citation