Centre for Vocational Education Research LSE RSS Email Facebook Twitter


CEP discussion paper
Evaluating Urban Transport Improvements: Cost Benefit Analysis in the Presence of Agglomeration and Income Taxation
Anthony J. Venables September 2004
Paper No' CEPDP0651:
Full Paper (pdf)

JEL Classification: R200; R420

Tags: agglomeration; productivity; urban transport

There is a substantial empirical literature quantifying the positive relationship between city size and productivity. The paper draws out the implications of this productivity relationship for evaluations of urban transport improvements. A theoretical model is developed and used to derive a wider cost-benefit measure that includes productivity effects. The order of magnitude of such effects is illustrated by calculations in a simple computable equilibrium model. It is argued tht productivity effects, particularly when combined with distortionary taxation, are quantitatively important, substantially increasing the gains that are created by urban transport improvements.