TRANSPORTATION INFRASTRUCTURE INVESTMENTS AND TRADE LIBERALIZATION*

Eric Bond

The Japanese Economic Review, 2006, vol. 57, issue 4, 483-500

Abstract: This paper examines the gains from cooperative agreements on transportation infrastructure investments when there are terms of trade and technological spillovers between countries. In a two ‐country model, cooperation on investment levels will result in a lower level of transport costs. However, the cooperative equilibrium may have a higher or lower level of infrastructure investment between the partner countries in the case of preferential liberalization. The paper also addresses the desirability of linking trade and infrastructure agreements when investment choices can be used strategically.

Date: 2006
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