Highlights The first study that uses a spatially detailed general equilibrium model to treat and parse out the economic effects of the negative externality of road congestion and the positive externality in total factor productivity (TFP) that arises from job densification. The paper contributes to the literature on general urban equilibrium and extends the methodology of the cost-benefit analysis of urban transportation investments. It is shown that an urban public transport megaproject (the «Grand Paris Express») would reduce road congestion while also concentrating jobs and increasing total factor productivity (TFP) in the Paris region. The TFP externality reduces the marginal cost of production and equilibrium product prices. Wages and rents are also reduced nominally but increase in real terms. This benefits consumers in the region and those importing from it. But because prices and wages are reduced, nominal revenues from sales, fuel and income taxes are also reduced causing fiscal losses. Including the TFP externality in the social benefit-cost analysis substantially increases the benefits of the megaproject and causes population in-migration in the long run. Revenue from Pigouvian congestion pricing is more than thrice the cost of building the project, but only about 62% of this cost plus the fiscal losses from the income, sales and fuel tax revenues in the short run and about 54% in the long run. Upward deviations from Pigouvian congestion pricing, hurts the welfare of the in-region consumers but increases total social welfare because the out-of-the region consumers benefit substantially.

    Abstract The «Grand Paris Express» (GPE) reduces road congestion, a negative externality (Walters, 1961; Vickrey, 1963); while inducing job densification, which improves total factor productivity (TFP), the source of a positive externality (Marshall, 1890). To parse out the effects and interaction of these externalities empirically, we use a spatial general equilibrium model treating transportation, output, labor, real estate and land markets. The TFP externality reduces marginal costs and output prices, benefitting consumers, including those importing from the region. Wages and rents increase but only after normalization by an output price index. The unsubsidized TFP externality adds importantly to the GPE's social benefit-to-cost ratio, despite causing fiscal losses from nominal income tax, sales tax and fuel tax revenues. Pigouvian congestion tolling raises long run welfare, and although toll revenue exceeds thrice the GPE's direct cost, it recovers only 62% of the direct cost plus the fiscal losses in the short run, but only 54% in the long run when the fiscal losses are larger. In the presence of distortionary taxation, consumers elsewhere who import from the region, and the unsubsidized TFP externality, charging more than Pigouvian congestion tolls improves overall social welfare but reduces the welfare of the in-region consumers.


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    Titel :

    Productivity benefits of urban transportation megaprojects: A general equilibrium analysis of «Grand Paris Express»


    Beteiligte:
    Anas, Alex (Autor:in) / Chang, Huibin (Autor:in)


    Erscheinungsdatum :

    2023-03-12




    Medientyp :

    Aufsatz (Zeitschrift)


    Format :

    Elektronische Ressource


    Sprache :

    Englisch