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Pricing and investment of cross-border transport infrastructure

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  • Mun, Se-il
  • Nakagawa, Shintaro

Abstract

We develop a simple two-country model of international trade in which the transportation cost between countries is endogenously determined by pricing and investment decisions of cross-border transport infrastructure. We evaluate alternative regimes of pricing and investment, i.e., free access (e.g., public road), pricing by two governments, and private operation. We also examine the effect of integrating operation. It is shown that investment rule in free access regime is inefficient. On the other hand, the investment rule is efficient if infrastructure charge is levied either by the government or by the private operators. We obtain the welfare ranking of alternative regimes under specific functional form, show how the welfare results depend on pricing policies.

Suggested Citation

  • Mun, Se-il & Nakagawa, Shintaro, 2010. "Pricing and investment of cross-border transport infrastructure," Regional Science and Urban Economics, Elsevier, vol. 40(4), pages 228-240, July.
    • Handle: RePEc:eee:regeco:v:40:y:2010:i:4:p:228-240
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    References listed on IDEAS

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    1. Se-il Mun & Shintaro Nakagawa, 2008. "Cross-border transport infrastructure and aid policies," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 42(2), pages 465-486, June.
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    5. Yang, Hai & Meng, Qiang, 2000. "Highway pricing and capacity choice in a road network under a build-operate-transfer scheme," Transportation Research Part A: Policy and Practice, Elsevier, vol. 34(3), pages 207-222, April.
    6. Verhoef, Erik T., 2007. "Second-best road pricing through highway franchising," Journal of Urban Economics, Elsevier, vol. 62(2), pages 337-361, September.
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    9. Limao, Nuno & Venables, Anthony J., 1999. "Infrastructure, geographical disadvantage, and transport costs," Policy Research Working Paper Series 2257, The World Bank.
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    Cited by:

    1. Mun, Se-il, 2019. "Joint provision of transportation infrastructure," Economics of Transportation, Elsevier, vol. 19(C), pages 1-1.
    2. Andrea Bonilla Bolaños, 2017. "Initiative for Infrastructure Integration in South America: Way Toward Regional Convergence," International Economic Journal, Taylor & Francis Journals, vol. 31(2), pages 326-354, April.
    3. de Rus, Ginés & Socorro, M. Pilar, 2019. "Pricing and investment in alternative transport infrastructures," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 96-107.
    4. Feder, Christophe, 2018. "Decentralization and spillovers: A new role for transportation infrastructure," Economics of Transportation, Elsevier, vol. 13(C), pages 36-47.
    5. Lorz, Oliver, 2020. "Investment in trade facilitating infrastructure: A political-economy analysis," European Journal of Political Economy, Elsevier, vol. 65(C).
    6. Akihiko Yanase & Ngo Van Long & Ngo Van Long, 2020. "Trade Costs and Strategic Investment in Infrastructure in a Dynamic Global Economy with Symmetric Countries," CESifo Working Paper Series 8707, CESifo.
    7. Marzena Kramarz & Katarzyna Dohn & Edyta Przybylska & Lilla Knop, 2020. "Scenarios for the Development of Multimodal Transport in the TRITIA Cross-Border Area," Sustainability, MDPI, vol. 12(17), pages 1-41, August.
    8. Se-il Mun, 2016. "Joint Provision of International Transport Infrastructure," Discussion papers e-15-015, Graduate School of Economics , Kyoto University.
    9. Masafumi Tsubuku, 2016. "Endogenous transport costs and firm agglomeration in new trade theory," Papers in Regional Science, Wiley Blackwell, vol. 95(2), pages 353-362, June.
    10. De Borger, Bruno & Proost, Stef, 2012. "Transport policy competition between governments: A selective survey of the literature," Economics of Transportation, Elsevier, vol. 1(1), pages 35-48.
    11. Akihiko Yanase & Ngo Van Long, 2020. "Strategic Investment in an International Infrastructure Capital: Nonlinear Equilibrium Paths in a Dynamic Game between Two Symmetric Countries," Mathematics, MDPI, vol. 9(1), pages 1-24, December.
    12. Masafumi Tsubuku, 2018. "Impacts of globalization on tariff settings," International Economics and Economic Policy, Springer, vol. 15(1), pages 117-129, January.
    13. Zheng, Shiyuan & Chen, Xirong & Dong, Kangyin & Wang, Kun & Fu, Xiaowen, 2022. "Joint investment on resilience of cross-country transport infrastructure," Transportation Research Part A: Policy and Practice, Elsevier, vol. 166(C), pages 406-423.

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    More about this item

    Keywords

    Infrastructure Transportation Trade Pricing Capacity choice;

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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