Chapter Three - Differences in optimal land use regulation between a closed city and an open city

Abstract

In this chapter, following Kono and Joshi (2012), we determine and compare optimal land use regulations in monocentric closed and open cities with traffic congestion externality. We define optimization as the maximization of social welfare. In our model, floor area ratio (FAR) and urban growth boundary (UGB) are regulated. Our definitions of closed and open cities slightly modify the standard definitions. In our closed city, population does not change in response to the land use regulation. An example is Silicon Valley that mostly attracts skilled ICT workers, and, as such, the total population is not affected much by the regulations. In contrast, in our open city, population changes in response to the regulation. Examples include towns that primarily consist of residences for workers employed elsewhere such as the “bed towns” in Japan.