Energy Costs, the Transport Network, and Urban Form

Abstract

The paper examines, through comparative statics, the impact on urban form of changes in the price of energy used for transportation. Two specific models are analyzed within a framework of long-run equilibrium: Model 1 involves households that supply an institutionally fixed number of labor hours, and their choice of residential location is affected by energy costs as the only out-of-pocket transportation cost for the journey to work; and model 2 deals with households that trade off travel time for work time and thus incur a time cost equal to the forgone income from production. The paper shows that in model 1 higher gasoline prices do result in less aggregate demand for gasoline and in less suburbanization of the residential activity. In model 2 higher energy prices do not necessarily result in either less suburbanization or less aggregate demand for gasoline.