17. Transportation Planning and the Urban Economy

In this chapter, I introduce transportation costs into the model from Chap. 15. My purpose here is to lay out a way of thinking about municipal land use planning that allows us to understand how it might organize a city. The model in this chapter then shows us how a planner might alternatively address the organization of a city to take into account issues of sprawl. The model introduces transportation costs formulated as quadratic programming problem wherein the benefits of land use complementarity can be directly assessed and shadow prices (Lagrangeans) can be interpreted. I draw an important conclusion from this analysis. The planned organization of a city under this model can look quite different from the planned organization under the design standards of Chap. 16. Put differently, if planners expect design standards to get at issues of sprawl and congestion, they will be disappointed. The significance of this argument is that it refocuses urban development policy away from land use and toward the notion of prices and marginal cost.