High-speed rail in China: Implications for intercity commuting and urban spatial structure

The rapid growth of a high-speed rail network has stimulated intercity commuting (IC) in large metropolitan areas in China. Motivated by the need to understand the formation and impact of IC, this paper develops a model of an economy that consists of two cities: a metropolis (the main city) and a micropolis (the satellite city). Both social optimum (SO) and competitive equilibrium (CE) of the model are analyzed. We show IC arises only when the housing price at the boundary of the metropolis is no less than that of the micropolis plus the IC cost. Moreover, intercity commuters must live in micropolis, and the area that they reside is identical at both SO and CE. Because the rail station is located at the edge of the city, intercity commuters prefer living on the periphery near the station to the city center. The model is tested by a real-world case study constructed with data collected in Shanghai and Jiaxing. It is found that within our model setting, IC is always welfare-enhancing, albeit it tends to hurt the well-being of the micropolis, Jiaxing. As long as the IC cost is small enough, however, turning Jiaxing into a "sleepers' town" could be both welfare-enhancing and Pareto-improving.