This paper analyzes optimal location decisions in a city where both residential and employment locations are endogenously determined. A model is constructed which includes both traffic congestion among commuters and colocational externalities among firms. The model establishes that if location tax of the kind discussed by Koopmans and Beckman is imposed on both residential and employee locations, the private decisions of households and firms will produce an optimal pattern of location. © 1982.
Segal, D., & Steinmeier, T. L. (1982). Location in a congested city. Regional Science and Urban Economics, 12(3), 405–423. https://doi.org/10.1016/0166-0462(82)90027-8