Telecommuting, a dispersed style of commuting enabled by developments in info-communication technology, is becoming increasingly popular among Japanese white-collar employees. According to our estimates, 9-14 million employees will telecommute by 2010, which will result in a 6.9-10.9% reduction in congestion in Tokyo, Japan. Associated cost savings are equivalent to 7.9-26.4% of annual spending on public transportation. Due to the considerable size of these positive external effects, some degree of policy support will be necessary to achieve a socially optimal level of penetration by telecommuting.
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