Cost-benefit analysis and the use of urban land for transportation

This paper investigates the allocation of resources, particularly land, within a suburban city where transportation is subject to congestion. In the competitive case, the allocation of land is decided (erroneously) by cost-benefit analysis. This is, perhaps, the best model of the real world process, at this level of abstraction. It is found that the road then built is wider everywhere than the road in the fully optimum case. Hence, if taxes and regulations will eventually be imposed to reduce the gap between the social and private cost of commuting, possibly too much land is now used for roads in American cities.