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Urban Sprawl and Policy Responses: A General Equilibrium Analysis of Residential Choice in a New Economic Geography Framework#


Olivia Koland

This research work develops an economic geography model of urban sprawl and its main drivers to provide a simple tool to quantitatively evaluate different anti-sprawl policies. As an extension to existing methods, economic theory and applied methods are thus combined.

The model examines in particular the integrated choice of residential location of households, commuting and transport emissions in an urban area and policy options to respond to the transport related environmental consequences of urban sprawl. First, a theoretical model is developed by extending a core-periphery type model of the new economic geography for interregional housing market interactions and environmental quality. In the empirical part of this thesis, the model is solved for a stylized urban center and its surroundings within a computable general equilibrium framework, where urban sprawl leads to detrimental environmental effects.

With this model, two policy instruments, cordon pricing and a spatial planning instrument, are evaluated and compared to internalize transport emissions induced by urban sprawl. The findings are illustrated for the greater Graz region in Austria.

Under the specific assumptions for model and policy design, cordon pricing is found to curb sprawl by addressing commuters, while a planning measure reduces the degree of urban sprawl due to the arising increase in property prices. As for environmental effects, both policies lead to desirable outcomes for the overall region, yet with different effects for ambient levels of local pollutants per region. Overall, it becomes clear that policies addressing transport emissions should also consider the spatial distribution of economic activities. Ideally, transport policy and spatial policy can be integrated to establish desirable forms of living.

Full book in readable form (english): Urban Sprawl and Policy ResponsesA General Equilibrium Analysis of Residential Choice in a New Economic Geography FrameworkOlivia KolandAustria-ForumGraz2010