The Effects of Railway Investments in a Polycentric City: A Comparison of Competitive and Segmented Land Markets

Abstract

The paper analyzes the effect of railway investment on land prices and land use in a polycentric city under various regulatory regimes of land markets. The introduction of a fast mode of transport (train), accessible in discrete locations, leads to an increase in city size. The stations of the fast mode induce dense residential settlements in their vicinity. As a result, the average residential and commercial land rents increase in both competitive and segmented land-market situations, compared with the unimodal transport case. When rail investments serve only one particular centre, this leads to the growth of the advantaged centre at the expense of the other centre. An investment in the fast mode results in city growth and an increase in rent receipts. However, the effect of the investment for individual centres and their corresponding residential areas depends on the underlying land-market conditions. Restrictions on commercial land use lead to increases in commercial rents, but this is more than offset by the decrease in residential land rents.