FEEM working papers "Note di lavoro" series
2007 .017

Compact or Spread-Out Cities: Urban Planning, Taxation, and the Vulnerability to Transportation Shocks


Authors: François Gusdorf, Stéphane Hallegatte
Series: Economy and Society
Editor: Gianmarco I.P. Ottaviano
Type: Journal
Keywords: Urban transportation,Housing,Inertia,Vulnerability,Transportation Taxation
JEL n.: R21,R48,H23,H31
JEL: Energy Policy
Pages: Vol. 35, No. 10, pp. 4826-4838
Date: 10/2007

Abstract

This paper shows that cities made more compact by transportation taxation are more robust than spread-out cities to shocks in transportation costs. Such a shock, indeed, entails negative transition effects that are caused by housing infrastructure inertia and are magnified in low-density cities. Distortions due to a transportation tax, however, have in absence of shock detrimental consequences that need to be accounted for. The range of beneficial tax levels can, therefore, be identified as a function of the possible magnitude of future shocks in transportation costs. These taxation levels, which can reach significant values, reduce city vulnerability and prevent lock-ins in under-optimal situations.

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