Urban Sprawl: Diagnosis and Remedies

TLDR

Urban sprawl is driven by population growth, rising incomes, and lower commuting costs, but market failures—such as undervaluing open space, ignoring congestion costs, and externalizing infrastructure expenses—distort land allocation between agriculture and urban uses. The study proposes that implementing development taxes and congestion tolls can remedy these market failures. The authors suggest levying development taxes and congestion tolls on commuters to correct the market failures. These remedies reduce the spatial extent of the city.

Abstract

This article argues that urban spatial expansion results mainly from three powerful forces: a growing population, rising incomes, and falling commuting costs. Urban growth occurring purely in response to these fundamental forces cannot be faulted as socially undesirable, but three market failures may distort their operation, upsetting the allocation of land between agricultural and urban uses and justifying criticism of urban sprawl. These are the failure to account for the benefits of open space, excessive commuting because of a failure to account for the social costs of congestion, and failure to make new development pay for the infrastructure costs it generates. Precise remedies for these market failures are two types of development taxes and congestion tolls levied on commuters. Each of these remedies leads to a reduction in the spatial size of the city.