Economic, Equity and Environmental Impacts of Transport and Industrial Policy Interventions: An Urban CGE Model Analysis

Policy interventions are widely used to promote regional development and reshape economic structure, yet their broader transport, spatial, and environmental impacts have received limited attention. This study develops an integrated urban computable general equilibrium (CGE) model that combines CGE theory with a computable urban economics (CUE) framework, overcoming the limitations of conventional CGE models in representing intra-urban transportation dynamics and capturing spatial heterogeneity within urban areas. By incorporating transport sectors and endogenous transport mode substitution, the model captures the interaction between industrial activities and transport systems, enabling a more comprehensive assessment of the economic, equity, and transport-related environmental impacts induced by policy interventions. A case study of the Kofu metropolitan area in Japan shows that transport improvement policy generates broad welfare gains and industrial expansion but may induce modal shifts that reinforce road dependence and increase environmental burdens. In contrast, tax reduction and subsidy policies also stimulate significant industrial growth while reducing aggregate transport demand through spatial concentration and industrial structural adjustment, but tend to exacerbate interregional inequality. The findings highlight trade-offs among efficiency, equity, and environmental sustainability, while demonstrating the analytical value of incorporating a CUE framework and transport–industry interaction mechanisms into a CGE model for policy-relevant evaluation.