Will 21st-century transportation innovations work against urban density, as the automobile did in the 20th century, or promote urban centralization, as the railroad did in the 19th century? The question matters well beyond academic urban economics: commuting costs shape how cities grow, how land is priced, and where housing demand concentrates, so the direction of new transport technology could influence urban land-use patterns for decades.

In the classic Alonso-Muth-Mills model, reducing the cost of commuting always reduces urban centralization. That result reverses, however, if the number of trips is endogenous and the elasticity of trips with respect to their costs is greater than one. This elasticity may have increased over time, as an increasing share of daily trips appears to be discretionary and city centers increasingly provide entertainment.

A new NBER working paper by Ed Glaeser, the Harvard economist known for his research on the economics of cities, examines the urbanizing effects of four trends in transportation technology: shared mobility (such as Uber), autonomy (such as Waymo), vertical travel, and green mobility, as provided by bike lanes. The framework echoes a longstanding debate in urban economics: 19th-century railroads made dense downtowns viable, while 20th-century cars enabled suburban sprawl, so which way new technologies cut is an open empirical question.

The paper argues that as people spend more time traveling in denser, large areas, innovations that reduce the time cost of travel, such as autonomous cars, seem likely to complement urban living, as long as they do not excessively increase traffic. Sharing is also easier in big cities, so technologies that involve sharing are likewise centripetal. The other trends appear less likely to have major effects.

Moreover, forces of inertia, including both regulation and legacy infrastructure, are likely to limit the impact of any new technologies in Europe and the United States. As a result, the biggest changes in urban form are likely to appear in East Asia and the developing world, where cities are still being built out and regulatory constraints on new construction are comparatively less binding. For readers, the practical question to watch is whether ride-hailing and robotaxi services measurably shift trip patterns and residential demand toward city centers as those technologies scale.

Source: Marginal Revolution