 A Sensitivity Assessment of Uncertainty in Infrastructure ExpansionKingsley E Haynes and Andrew Krmenec The Annals of Regional Science, 1989, vol. 23, issue 4, 299-309 Abstract: Under and overdesign is a major consideration in public infrastructure expansion. Traditional engineering economies of scale leading to overdesign errors must be conterbalanced by greater attention to high cost financing. Uncertainty in demand forecasting and in financial markets make decision tools which incorporate measures of information imperfection increasingly important. Further issues of overall social welfare make the question of short term and intergenerational equity major concerns. A rational expectations stochastic-analog of the conventional, present value, infrastructure expansion model has optimal overdesign properties. The problem is restated as a two-person, planner vs. future, social welfare game in a simple capital loss model. Sensitivity analysis shows the game-theoretic model which favors expansion underdesign is relatively less sensitive to greater demand forecast uncertainty than the rational expectations model. Date: 1989 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:anresc:v:23:y:1989:i:4:p:299-309 Ordering information: This journal article can be ordered from Access Statistics for this article The Annals of Regional Science is currently edited by Martin Andersson, E. Kim and Janet E. Kohlhase More articles in The Annals of Regional Science from Springer, Western Regional Science Association Contact information at EDIRC. |
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