The RELU-TRAN Model and its applications

The Regional Economy, Land Use and Transportation Model (RELU-TRAN) is a spatially detailed computable general equilibrium model of a metropolitan economy, designed to treat the effects of a variety of changes and policies on a metropolitan area. Grounded in microeconomic theory, the model treats the decisions of consumers, firms and real estate developers. The government is treated as a levier of various taxes and as a regulator of land use, building stocks and environmental quality.

Consumers in RELU-TRAN make utility maximizing decisions on where in a metropolitan area to work and where to reside, how much housing floor space to consume at the place of residence and how many non-work trips to make to various destinations where goods and services can be acquired. Hours supplied to a workplace compete against travel time allocated to commuting and to non-work trips. Consumers also decide which mode of transportation (car, public transit or non-motorized) to use on a trip and what travel route of the transport network to utilize in the case of a car trip. Car type and route choices involve a fuel economy decision and travel is subject to traffic congestion on the road network. The fuel economy of the vehicle and the level of congestion determine the speed and the level of gasoline consumed and the CO2 and other pollutants emitted. RELU-TRAN treats consumer types by income and can treat them by family size and other characteristics.

Profit-maximizing competitive firms in RELU-TRAN are classified into industries. These industries can export their outputs and are interconnected via inter-industry demand relationships to each other but also to industries in the rest of the world. The retail industry sells directly to the consumer but can also export and import. In addition to the intermediate inputs purchased from the other industries, the primary input groups of an industry include business capital, buildings and land and labor of all skill levels.     

Developers in RELU-TRAN are the profit-maximizing investors in developable land and existing buildings. Income from consumers or firms renting these assets and expected capital gains or losses from redevelopment, construction or demolition combine to determine the profitability of each type of real estate investment and how much developers would construct, demolish or redevelop.

The government sector of RELU-TRAN controls a number of tax instruments such as income tax, ad-valorem property tax, Pigouvian tolls on traffic congestion, taxes on parking, cordon tolls and tax on gasoline, while a variety of other taxes on consumers and firms can be treated and the revenue from such taxation can be distributed among the consumers. The government can also control land-use specific lot size or floor-area-ratio zoning regulations as well as controls on aggregate land use such as those of urban growth boundaries. The model is designed to evaluate the costs and benefits of such policies or change and scenarios, and to produce measures of welfare changes and cost-benefit ratios and cost recovery ratios for infrastructure investments.

The development of the RELU-TRAN model at the State University of New York at Buffalo by Alex Anas was funded by the National Science Foundation Urban Research Initiative’s award SES 9816816 and award RD-83184101-0 from the United States Environmental Protection Agency’s 2004 Science to Achieve Results (STAR) competition. This support resulted in applications of RELU-TRAN to study the effects of the gasoline price on urban structure and of cordon tolling, using Chicago data. See below for published articles.  

Award 142934, of the 2010 Multi-campus Research Program and Initiative (MRPI) program of the University of California supported application of the RELU-TRAN model to the Greater Los Angeles Region to study Pigouvian congestion pricing of roads at the network level. More recently an extension of the model that includes Marshallian agglomeration effects on the productivity of firms has been applied to the Paris region with support from the Societe du Grand Paris to evaluate the Grand Paris Express, a 35 billion euros public transit megaproject under construction and slated for completion in 2035.

The attachments below are published articles or working papers describing the applications of the RELU-TRAN model to date.