Higher distance costs translate to lower congestion costs, study finds.

• Position: News & Numbers

Urban congestion represents not just an unpleasant experience but also significant costs, according to "Congestion, Agglomeration, and the Structure of Cities," a recent working paper from the Federal Reserve Bank of Philadelphia. At the same time, urban density creates production advantages. The paper features a spatial equilibrium model of urban structure, taking into account factors such as the spatial distribution of employment, population, land use, land rents, and commute times.

The results suggest that trading higher distance costs for lower congestion costs yields positive results: "Production and rents both increase, while more land is preserved for open space. In addition, the economy exhibits both higher production and increased efficiency in...