Trade and the Spatial Distribution of Transport Infrastructure

Gabriel Felbermayr, Alexander Tarasov and Gabriel J. Felbermayr
Authors registered in the RePEc Author Service: Gabriel J Felbermayr

No 5634, CESifo Working Paper Series from CESifo

Abstract: The distribution of transport infrastructure across space is the outcome of deliberate government planning that reflects a desire to unlock the welfare gains from regional economic integration. Yet, despite being one of the oldest government activities, the economic forces shaping the endogenous emergence of infrastructure have not been rigorously studied. This paper provides a stylized analytical framework of open economies in which planners decide non-cooperatively on transport infrastructure investments across continuous space. Allowing for intra- and international trade, the resulting equilibrium investment schedule features underinvestment that turns out particularly severe in border regions and that is amplified by the presence of discrete border costs. In European data, the mechanism explains about a fifth of the border effect identified in a conventionally specified gravity regression. The framework sheds light on the welfare costs of second best investment schedules, on the effects of intercontinental trade or of privatized infrastructure provision.

Keywords: economic geography; international trade; infrastructure investment; border effect puzzle (search for similar items in EconPapers)
JEL-codes: F11 R13 R42 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Related works:
Journal Article: Trade and the spatial distribution of transport infrastructure (2022)
Working Paper: Trade and The Spatial Distribution of Transport Infrastructure (2015)
Working Paper: Trade and the Spatial Distribution of Transport Infrastructure (2015)
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