THE DYNAMICS OF DOMESTIC AND INTERNATIONAL INFRASTRUCTURE INVESTMENTS

Marco Alderighi

Articles, 2013, vol. 40, issue 3

Abstract: This paper analyses the optimal investment policy in domestic and international infrastructure through a model of competition among countries. The framework provided by Martin and Rogers [Martin, P. and Rogers, C., 1995, Industrial location and public infrastructure, Journal of International Economics, 39, 335-51.] is here extended to include dynamic aspects. The optimal investment trajectories are characterized in two situations : first, when coordination among countries is reached and second when countries behave egoistically. Since international infrastructure produces positive externalities, it emerges that the second situation is sub-optimal.

Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:jte:journl:2013:3:40:2

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