Do Transport Infrastructure Investments Decentralize a City? a Theoretical Revisit to the Alonso-Mills-Muth City with Scale Economies

This study explores the impacts of transport infrastructure investments on the compactness of a city. We introduce two new factors into the conventional Alonso-Mills-Muth model: First, city residents consume differentiated service varieties; and second, they pay transport costs not only to go to work but also to shop those varieties. We analyze the effects of key parameters, including the consumers' valuation of the range of service varieties, on whether the investments decentralize a city or not