Urban residential location and the comparative statics of traffic congestion

The early land use models tended to ignore externalities associated with urban transportation. More recently, even the models which treat transportation-related externalities analyze the spatial impacts of congestion or pollution mostly numerically by using simulation techniques. This paper theoretically formulates a residential location model which includes congestion and analyzes the comparative statics impacts of variations in traffic volume and road capacity, which are two elements of congestion. The results of comparative static analysis show that a traffic increase will compact the urban form, while provision of more highway capacity induces urban sprawl.