commuters from the suburbs to the core. The costs of creating the
bridges or the public transit network are ignored, and the focus is
just on comparing Pigouvian bridge tolls, transit fare subsidies and a
UGB as instruments. The aggregate revenues from these instruments
and the ADLR from the core and the suburb (when a UGB is used)
are distributed equally to the residents. This is another instance in
which the first-best policy of road pricing to alleviate congestion
again results in more sprawl: the suburban population and land area
expands because congestion tolls cause suburban commuters to
switch to public transit in the suburbs, while the level of utility
increases. In this model, however, the UGB cannot increase utility
whether it is restrictive or expansive, but it is a second-best policy
when it is used together with a subsidy to each public transit user.
The same subsidy is a third-best instrument when used alone.