Thispaperanalysestheoreticallytheeffectoftransportationandhousingsubsidiesonurbansprawl,modalchoicedecisionsandurbanspatialstructureusingaspatialgeneralequilibriummodelinamonocentriccitywithtwotransportmodes.Ouranalysisshowsthatpublictransitsubsidyleadstourbanshrink,whilstsubsidizingautomobileandhousingmakethecitysprawl.Wealsofindtheeffectsoftheotherfactorsonurbansprawl,suchashouseholdsincomeanddemand,rurallandrent,theincometaxrate,thetotalfixedcostofpublictransitandautomobileandthetravellingmarginalcostofpublictransitandautomobile.Furthermore,thispaperalsostudieshowtomaximizetheurban-area-widespatialequilibriumutilitylevel.
