Polycentric Spatial Development, Externalities and Cost-Benefit Analysis.

This article investigates the relevance of traditional cost-benefit analysis in the context of spatial development. More precisely, in a sequence of spatial models with two centers, we successively consider the impact of households' relocation and urban externalities (congestion, pollution) on the costs and benefits as far as transportation investments are concerned. A concept of effective externality is introduced and is shown to play a central role in evaluating the efficiency of equilibria with multiple centers.