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 21% of the border effect identified in a conventionally specified gravity regression.
| Originalsprache | Englisch |
|---|---|
| Aufsatznummer | 103473 |
| Fachzeitschrift | Journal of Urban Economics |
| Jahrgang | 130 |
| DOIs | |
| Publikationsstatus | Veröffentlicht - Juli 2022 |
Bibliographische Notiz
Funding Information:☆ We thank Kristian Behrens, Holger Breinlich, Lorenzo Caliendo, Kerem Cosar, Dalia Marin, Philippe Martin, Pierre Picard, Diego Puga, Esteban Rossi-Hansberg, seminar participants at the universities of Zurich, St. Gallen, Konstanz, Tuebingen, Giessen, TU Darmstadt, Linz, Rotterdam, Luxembourg, Ifo Munich, Paris School of Economics, Nottingham, Hohenheim, Milano, and the European University Institute, at the Conference of the Society of Economic Dynamics (SED) in Warsaw, the Congress of the European Economic Association (Geneva), the European Trade Study Group (Munich), the 17th Conference of the SFB/TR (Munich), the Congress of the German Economic Association (Hamburg), and the workshop “Imperfect Competition and Spatial Economics: Theoretical and Empirical Aspects” (Saint-Petersburg) for valuable comments and discussions. We are especially grateful to Philip Ushchev for discussions on variation calculus and to Kharis Sokolov for excellent research assistance. We also thank the anonymous referees for the excellent suggestions that substantially improved the paper. This work was supported by the Russian Science Foundation under grant Project 18-18-00253.
Funding Information:
We thank Kristian Behrens, Holger Breinlich, Lorenzo Caliendo, Kerem Cosar, Dalia Marin, Philippe Martin, Pierre Picard, Diego Puga, Esteban Rossi-Hansberg, seminar participants at the universities of Zurich, St. Gallen, Konstanz, Tuebingen, Giessen, TU Darmstadt, Linz, Rotterdam, Luxembourg, Ifo Munich, Paris School of Economics, Nottingham, Hohenheim, Milano, and the European University Institute, at the Conference of the Society of Economic Dynamics (SED) in Warsaw, the Congress of the European Economic Association (Geneva), the European Trade Study Group (Munich), the 17th Conference of the SFB/TR (Munich), the Congress of the German Economic Association (Hamburg), and the workshop “Imperfect Competition and Spatial Economics: Theoretical and Empirical Aspects” (Saint-Petersburg) for valuable comments and discussions. We are especially grateful to Philip Ushchev for discussions on variation calculus and to Kharis Sokolov for excellent research assistance. We also thank the anonymous referees for the excellent suggestions that substantially improved the paper. This work was supported by the Russian Science Foundation under grant Project 18-18-00253.
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