American Economic Review Vol. 114 No. 10 2024

Efficiency and Equity Impacts of Urban Transportation Policies with Equilibrium Sorting

Panle Jia Barwick¹; Shanjun Li²; Andrew Waxman³; Jing Wu³; Tianli Xia⁴

¹ Department of Economics, UW-Madison and NBER (email: ) · ² Dyson School of Applied Economics and Management, Cornell University, NBER, and RFF (email: ) · ³ LBJ School of Public Affairs, University of Texas-Austin (email: ) · ⁴ Hang Lung Center for Real Estate, Tsinghua University (email: )

Abstract

We estimate an equilibrium sorting model of housing location and commuting mode choice with endogenous traffic congestion to evaluate urban transportation policies. Leveraging fine-scale data from travel diaries and housing transactions identifying residents' home and work locations, we recover rich preference heterogeneity over both travel mode and residential location decisions. While different policies produce the same congestion reduction, their impacts on social welfare differ drastically. In addition, sorting undermines the congestion reduction under driving restrictions and subway expansion but strengthens it under congestion pricing. The combination of congestion pricing and subway expansion delivers the greatest congestion relief and efficiency gains.

DOI

10.1257/aer.20220212

Volume

114

Issue

10

Pages

3161-3205

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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