General Equilibrium Effects of a Major Rail Investment: First Results from a Quantitative Spatial Model for Ticino, Switzerland

Abstract

This paper applies a quantitative spatial model (QSM) to the Ceneri Base Tunnel in Ticino, Switzerland, producing general equilibrium predictions of how a major rail investment reshapes the spatial economy. The model adapts the Hörcher and Graham (2025) framework, which extends the standard QSM with a dual budget constraint that separates monetary and time costs of commuting, yielding an endogenous, pair-specific marginal value of time. Because spatially disaggregated floorspace price data is unavailable for the study area, we reverse the standard QSM inversion procedure: prices are recovered from observed floorspace stock using endogenous aggregates from the commuting block — an approach that, to our knowledge, has not been implemented in the QSM literature. Applied to 195 zones in the Bellinzona–Lugano corridor, the model predicts employment concentration in Lugano (+5%), residential decentralisation towards Bellinzona (+2%), and a productivity gain in Lugano (+0.3%) driven by agglomeration externalities. Wages decline across both agglomerations as effective labour supply rises. The average value of time experienced by commuters falls from 17.7 to 17.4 CHF/hr, yet the structural welfare measure registers a positive gain (+0.08%) — a divergence that connects to the theoretical literature on the value of travel time savings and has implications for how transport investments are evaluated.