Congestion Cost and the Use of Land for Streets

Abstract

The traditional model of the equilibrium economic geography of a monocentric city is generalized to introduce congestion costs as well as distance costs of the transportation. This has the effect of generating more curvature in the equilibrium rent gradient than the early theory had suggested. More important, if congestion tolls are not charged on crowded roads, land rents will reflect the private costs of transportation, not the full social cost. Market land values will then be faulty guides to land use, and cost-benefit analyses will give misleading results. Some sample computations suggest that the result will often be to cause more land to be taken for use as streets than is socially desirable, especially nearer the center of the city

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