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An increase in transportation costs impacts the welfare of households living on the outskirts of the city more than the other inhabitants and, in the short term, limited housing supply stops them from moving toward the center. Over a longer period, however, urban adjustments cancel out this inequality: (1) in the center, rent level rises because of higher demand, inducing investment in additional...
This paper investigates the consequences of a sudden increase in transportation costs when household behaviors and building inertia are accounted for. A theoretical framework is proposed, capturing the interactions between behaviors, transportation costs and urban structure. Numerical simulations show that changes in households and landowners’ choices reduce significantly the long-term adverse effects...
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