Voting on Infrastructure Investment: The Role of Product Market Competition

Arghya Ghosh and Kieron Meagher

ANU Working Papers in Economics and Econometrics from Australian National University, College of Business and Economics, School of Economics

Abstract: In spatial competition, public infrastructure plays a crucial role in determining product market outcomes. In our model, consideration of infrastructure’s impact on the product market drives the voting behavior of consumers in their dual role as voter/taxpayers. The spatial heterogeneity of consumers produces conflicting political interests and in many cases inefficient outcomes. However across both exogenous and endogenous market environments product market competition consistently leads to higher levels of publicly funded infrastructure than monopoly/collusion. Furthermore, competition’s boost to the popular support for infrastructure investment is often excessive while monopoly leads to underinvestment.

JEL-codes: D43 H40 H54 L13 (search for similar items in EconPapers)
Pages: 23 Pages
Date: 2014-08
New Economics Papers: this item is included in nep-cdm, nep-com, nep-pol and nep-tre
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Persistent link: https://EconPapers.repec.org/RePEc:acb:cbeeco:2014-618

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