Transport in a Congested City: A computable equilibrium model applied to Kampala City

March 29 2016

This paper develops and applies a quantitative model of internal city structure to analyse the impacts of transport improvement in Kampala, Uganda. Using a Spatial Computable General Equilibrium Model we develop a simulated version of a city in which firms and households choose their location decisions according to the cost of commuting and transporting goods across the urban space. In a rapidly developing city, with congested transport infrastructure, new and improved transport routes lead to both direct and indirect effects for the city’s residents. The model captures the direct impacts of transport changes on commuting times, and the indirect impacts on the price of goods and services, rents, and wages. It also captures the important long-term impacts on land use within the city, as both firms and residents adjust their location choices in response to these price changes, leading to greater economic benefits of transport investments through economies of scale and agglomeration effects. The results show that transport investments that increase speeds of travel within the city result not only in an increase in the welfare of these directly affected residents, but also on residents without access to vehicles. The relative size of the impacts on these two groups vary according to the location of the transport investment, the ease with which firms and residents can relocate across the urban space, and the size of the agglomeration effects for different industries within the city. 

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Tony Venables is Professor of Economics at the University of Oxford where he also directs the Centre for the Analysis of Resource Rich Economies. He has published extensively in the areas of international trade and spatial economics, including work on trade and imperfect competition, economic integration, multinational firms, and economic geography.

Julia Bird is a Postdoctoral Research Economist at Oxford University. Her research focuses on understanding the location choices of individuals and firms within and across urban areas, and in particular, how these spatial patterns are affected by transport infrastructure.

Louise Bernard is a PhD student at LSE in Economic Geography.