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Consumer Benefits of Infrastructure Services

Author

Listed:
  • Carmit Shwartz

    (School of Economics, Australian School of Business, the University of New South Wales)

  • W. Erwin Diewert

    (University of British Columbia and University of New South Wales)

  • Kevin J. Fox

    (School of Economics & Centre for Applied Economic Research, Australian School of Business, the University of New South Wales)

Abstract

This paper provides methodologies for evaluating consumer benefits of infrastructure services using potentially observable information. We define benefit measures for consumers and, using general principles from the index number literature, derive alternative first and second order approximations to these measures under the assumption of fixed prices for market goods and services. We then describe how the benefit measures and their associatedapproximations can be used in quantifying the economic benefits when prices are allowed to change endogenously as the provision of infrastructure services changes. In addition, under quite unrestrictive assumptions, a measure of welfare change based only on potentially observable data is derived.

Suggested Citation

  • Carmit Shwartz & W. Erwin Diewert & Kevin J. Fox, 2014. "Consumer Benefits of Infrastructure Services," Discussion Papers 2014-17, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2014-17
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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2014-17.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Joeé Emilio Boscá & Francisco Javier Escribá & María José Murgui, 2002. "The Effect of Public Infrastructure on the Private Productive Sector of Spanish Regions," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 301-326, May.
    2. Nigel Spence & Antonis Rovolis, 2002. "Duality theory and cost function analysis in a regional context: the impact of public infrastructure capital in the Greek regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 36(1), pages 55-78.
    3. Torstein Bye & Alexandra Katz, 1995. "Returns to Publicly Owned Transport Infrastructure Investment . A Cost Function/Cost Share Approach for Norway, 1971-1991," Discussion Papers 154, Statistics Norway, Research Department.
    4. Mamuneas, Theofanis P. & Ishaq Nadiri, M., 1996. "Public R&D policies and cost behavior of the US manufacturing industries," Journal of Public Economics, Elsevier, vol. 63(1), pages 57-81, December.
    5. Ernst R. Berndt & Bengt Hansson, 1991. "Measuring the Contribution of Public Infrastructure Capital in Sweden," NBER Working Papers 3842, National Bureau of Economic Research, Inc.
    6. Bruno Jullien & Frederic Rychen & Antoine Soubeyran, 2000. "Local Public Investment and Competition for a Firm," Econometric Society World Congress 2000 Contributed Papers 1400, Econometric Society.
    7. W. Erwin Diewert, 1986. "Export Supply and Import Demand Functions: A Production Theory Approach," NBER Working Papers 2011, National Bureau of Economic Research, Inc.
    8. Atsushi Tsuneki, 2002. "Shadow-Pricing Interpretation of the Pigovian Rule for the Optimal Provision of Public Goods: A Note," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(1), pages 93-104, January.

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    More about this item

    Keywords

    Consumer benefits; infrastructure services; first order approximation; second order approximation; exible functional forms; index number theory;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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