Urban sprawl is described as the establishment of housing and commercial development increasingly far from the city center. What might be the effect on sprawl if it was the policy of a city to build infrastructure-sewers, powers, and other essentials services-to this development at the average cost to the city? If it built the infrastructure at the marginal cost to the city?
Reducing sprawl might be the effect if cities simply stopped building new and unnecessary infrastructure but focused instead on maintaining and enhancing the infrastructure already available. In almost every city I know, expansion means that already-developed areas go into decline. Strip malls sit empty while new malls are built farther away from the city center. This is not a wise use of taxes. Perhaps the current economic crisis will mean that cities will have far less money to waste in these ways.
Sprawl would be reduced by charging for average costs but not for marginal costs. If a city has infrastructure already built out to a certain spot, extending it will not cost as much (marginal cost) as the average cost per unit of distance for the whole infrastructure system would be. Therefore, charging the average cost would result in a higher price and less sprawl.