Faster, taller, better: Transit improvements and land use policies

We study the interaction between transit improvements and land use policies. Bengaluru, one of India’s largest cities, inaugurated a metro system in 2011 but has extremely low building heights, even near metro stations. We build a rich dataset and a quantitative spatial model in which heterogeneous workers choose among different commuting modes. We find that the metro increases citywide output and welfare, even net of costs. However, the net gains are several times larger with transit-oriented development (TOD), i.e., when height limits are relaxed near stations. Moreover, TOD and the construction of the metro are complementary policies.