This paper develops a theoretical framework for evaluating one aspect of the long-run or secondary effects of a transport improvement--changes in the residential location of urban commuters that alter the mode and length of their work trips. The theory assumes that each household, in choosing its location site, faces a three-way tradeoff between the site, the quality and quantity of housing located there, and a composite commodity representing all other goods and services. The model is manipulated to derive an estimating equation relating changes in travel costs to changes in the household's preferred location. When estimated for a particular transport situation the major finding is the importance of the price effect. Although direct cost savings are important, especially in the short run, in the long run and especially for innovations with substantially increased speed or reduced operating costs the price effect may completely dwarf the income effect. 32 pp. Ref.
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