The last two decades have clearly shown that increased automobile ownership and highway construction can facilitate profound redistributions of population and economic activity within metropolitan areas. These changes are related in a fundamental way to many of the social and economic difficulties of our large, mature, central cities: loss of middle and upper income groups to the suburbs, declining retail sales in downtown areas, erosion of the tax base, shift of manufacturing and service establishments to suburban areas, decline of mass transit service and patronage, and increased traffic congestion. There is a great deal of support for the view that there has been too much highway construction and that the time has come to help public transportation. This paper explores some of the issues involved in a program of assistance to public transportation.

A SUMMARY IS PRESENTED OF THEORETICAL ANALYSIS DEVELOPED TO EXAMINE THE STRUCTURE OF FACTOR PRICES AND COSTS WITHIN A CORE-DOMINATED CITY. THIS ANALYSIS HIGHLIGHTS THE EFFECTS OF CERTAIN TECHNOLOGICAL LAGS AND TRANSPORT COST RELATIONSHIPS. THE DECENTRALIZATION OR SUBURBANIZATION OF ECONOMIC ACTIVITY IN MAJOR METROPOLITAN AREAS IS A FAMILIAR PHENOMENON. A MODEL DESCRIBING THE ECONOMIC ACTIVITY WITHIN THESE METROPOLITAN AREAS, ASSIGNS TO THE AUTOMOBILE A MORE MODEST ROLE IN THE SUBURBANIZATION OF METROPOLITAN ACTIVITY THAN IS FOUND IN MOST STUDIES. RESULTS ARE PRESENTED OF TWO EMPIRICAL ANALYSES OF THE MANUFACTURING SECTOR IN THE PARTICULAR CORE-DOMINATED CITY OF CHICAGO. THE ANALYSIS OF LOCATION IS MADE FOR THIS SECTOR SINCE MANUFACTURING IS THE LARGEST EMPLOYER IN MANY OF THESE METROPOLITAN AREAS AND HAS HAD THE LARGEST CENTRAL CITY DECLINE IN EMPLOYMENT.