A Model of Public Policy toward Office Relocation

Abstract

When an office activity moves voluntarily in response to incentives provided by public policy, there is a presumption that the move benefits the relocating activity. But other activities may have to travel farther for face-to-face contact with the relocating activity; the resulting increases in transportation costs should be included in the system-wide effects of the relocation policy. A numerical example demonstrates that increases in system-wide costs can outweigh the benefits to the relocating activity. Empirical calibration of the model requires some modification of the contact diaries developed by Thorngren, Törnqvist, and others. Diary information is needed from activities which initiate contact with the relocating activity. Diary information on transportation costs for face-to-face contacts and for the journey to work can be used to conduct simulations of alternative relocation policies.