This paper develops a general equilibrium model of a city with two transportation modes. One mode is land intensive, that is, roads, while the second is land economizing, that is, subways. The effects of subway construction on land values and land uses in a metropolitan area are discussed. An important implication is that, if a subway system is worth constructing, it will have a suburbanizing effect on the city. In addition there will be considerable impact on housing prices and land values, but these changes will not totally offset each other.
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Dennis R. Capozza (1973) studied this question.
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