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Optimal regulation on building size and city boundary: An effective second-best remedy for traffic congestion externality

Author

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  • Kono, Tatsuhito
  • Joshi, Kirti Kusum
  • Kato, Takeaki
  • Yokoi, Takahisa

Abstract

This paper numerically evaluates the efficiency of regulations on building size and city size in a congested closed city by comparing welfare gain with that achieved under a first-best toll regime. Results show that whereas the urban growth boundary (UGB) is a poor substitute for the toll regime as expected, an optimal regulation on building size in the presence of a suitably chosen UGB yields significant welfare gain, producing an effective substitute for a first-best toll regime. Moreover, the optimal regulation on the building size requires not only downward adjustment to the market population density at the boundary locations but also upward adjustment at the central locations.

Suggested Citation

  • Kono, Tatsuhito & Joshi, Kirti Kusum & Kato, Takeaki & Yokoi, Takahisa, 2012. "Optimal regulation on building size and city boundary: An effective second-best remedy for traffic congestion externality," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 619-630.
    • Handle: RePEc:eee:regeco:v:42:y:2012:i:4:p:619-630
    DOI: 10.1016/j.regsciurbeco.2012.02.004
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    References listed on IDEAS

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    More about this item

    Keywords

    Congestion; Externalities; Toll regime; Floor area ratio; Urban growth boundary;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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