The Political Economy of Transportation Investment

Giacomo Ponzetto and Edward Glaeser

No 12207, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Will politics lead to over-building or under-building of transportation projects? In this paper, we develop a model of infrastructure policy in which politicians overdo things that have hidden costs and underperform tasks whose costs voters readily perceive. Consequently, national funding of transportation leads to overspending, since voters more readily perceive the upside of new projects than the future taxes that will be paid for distant highways. Yet when local voters are well-informed, the highly salient nuisances of local construction, including land taking and noise, lead to under-building. This framework explains the decline of urban mega-projects in the US (Altshuler and Luberoff 2003) as the result of increasingly educated and organized urban voters. Our framework also predicts more per capita transportation spending in low-density and less educated areas, which seems to be empirically correct.

Keywords: Infrastructure; Political economy; Transportation investment; Nuisance mitigation; Elections; Imperfect information (search for similar items in EconPapers)
JEL-codes: D72 D82 H54 H76 R42 R53 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-geo, nep-pol and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The political economy of transportation investment (2018)
Working Paper: The Political Economy of Transportation Investment (2017)
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