This study examines the effects of bottleneck congestion and an optimal time-varying congestion toll on the spatial structure of cities. We develop a model in which heterogeneous commuters choose departure times from home and residential locations in a monocentric city with a bottleneck located between a central downtown and an adjacent suburb. We then demonstrate that commuters sort themselves temporally and spatially on the basis of their value of travel time and their flexibility. Furthermore, we reveal that introducing an optimal congestion toll alters the urban spatial structure, which contrasts with the previous literature. We further demonstrate through an example that congestion tolling can cause the city to physically expand outward, which helps rich commuters but hurts poor commuters.
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