Abstract
This paper explores the relationship between the scale of public transit services in large urban areas of the United States and the efficiency of those economies, with efficiency measured by commercial office rents. Panel regressions are estimated in which real office rent is the left-hand variable. The key right-hand variable is per-capita transit use. Other right-hand variables include demand for office space, office vacancy rate, average real wage, and unemployment rate. Two-stage least-squares equations are estimated to deal with possible simultaneity between office rents and transit use. Results indicate a positive relationship between public transit use and office rents. The relationship is positive and significant in urban areas with higher concentrations of office space in the central business district, and nonexistent in urban areas with lower concentrations. The estimated dollar impact of transit use on office rents is small.
Highlights
A variety of arguments are made to support public investment in mass transit
Based on the econometric evidence for 42 of the largest urbanized areas of the United States, there appears to be a positive link between the scale of public transit use and commercial office rents
The positive link is no stronger for central business district (CBD) office markets than for suburban ones, but the link is present for both CBD and suburban markets in those UZAs with a high concentration of office space in the CBD
Summary
A variety of arguments are made to support public investment in mass transit. Some relate to its environmental advantages over auto use (Owen 2009), and these arguments have some scientific evidence supporting them. As first described by Alfred Marshall (1920), there are three efficiency gains from the concentration of economic activities in urban areas, referred to as urban agglomeration economies They are (1) the pooling of labor, (2) input sharing, and (3) knowledge spillovers among firms. Our hypothesis is that urban economic efficiency, measured by commercial office rents, is enhanced by the scale of public transit use. Put another way, urban economies of agglomeration are promoted by the scale of public transit use. As an indicator of efficiency gains from the presence of urban agglomeration economies, can be hypothesized to be higher in areas better served by mass transit for multiple reasons.
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
