Valuing Domestic Transport Infrastructure: A View from the Route Choice of Exporters

Jingting Fan, Yi Lu and Wenlan Luo
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Jingting Fan: Pennsylvania State University
Wenlan Luo: Tsinghua University

The Review of Economics and Statistics, 2023, vol. 105, issue 6, 1562-1579

Abstract: A key input to quantitative evaluations of transport infrastructure projects is their impact on transport costs. We propose a new method of estimating this impact relying on widely accessible customs data: by using the route choice of exporters. We combine our method with a spatial equilibrium model to study the effects of the massive expressway construction in China between 1999 and 2010. We find transport costs are 20% lower on expressways than on regular roads. The expressways construction increases aggregate exports by 10% and domestic trade by 14%. It generates 5.1% welfare gains, implying a 150% net return to investment.

Date: 2023
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