Investing in inter-city and/or intra-city rail lines? A general equilibrium analysis for a two-city system

Abstract

This paper proposes a two-city model for investigating the effects of investing in intra-city and inter-city rail lines, in which population migration and commuting between cities may occur and the spatial structure of each city is explicitly treated. The rail lines concerned include subway line within a city and high-speed rail (HSR) line between cities. The cities in the two-city system are differentiated into high-income and low-income ones according to their average wage levels of employments. Five scenarios of rail line investments are considered: (i) constructing HSR line between cities, (ii) constructing subway line in high-income city, (iii) constructing subway line in high-income city and HSR line between cities, (iv) constructing subway line in each city, and (v) constructing subway line in each city and HSR line between cities. The rivalry between concentration and dispersion effects of subway and HSR line investments for the five scenarios are analytically explored in terms of residential location/workplace/travel mode choices, inter-city commuting, population migration, and urban spatial structure. The conditions for inducing inter-city commuting and cities’ mergence due to rail line investments are identified. Numerical simulations are provided to illustrate the properties and applications of the proposed model, together with a case study of an urban agglomeration located in Central China.