Pareto-improving policies for an idealized two-zone city served by two congestible modes

Document Type

Journal Article

Publication Date


Subject Area

place - urban, mode - car, mode - rail, policy - congestion, ridership - commuting, ridership - behaviour, ridership - mode choice, economics - subsidy, land use - urban sprawl, land use - impacts


Monocentric city model, Dynamic congestion, Land use tax, Transit subsidy, Urban sprawl, Pareto improving


We study urban structure and traffic congestion of a monocentric city by idealizing its suburb and its core as two zones and then exploring what would happen when they are connected by a congestible highway and a crowded railway system. We introduce dynamic congestion effect into commuters’ departure-time and mode choice behaviours, and analyse the endogenous interactions between their travel and residential relocation choices. Studies ignoring dynamic departure-time behaviour show an ambiguous effect of transit improvements to the city. However, we find that transit improvement has a definitive impact on city structure: it increases the residents’ equilibrium utility, at a cost of increased suburb land use. We show that it is possible to design Pareto-improving land-use and transit policies which benefit the residents without causing urban sprawl. We provide analytically the existence conditions of such policies and suggest that a high return of land use tax to subsidize transit improvement is required.


Permission to publish the abstract has been given by Elsevier, copyright remains with them.


Transportation Research Part B Home Page: