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Welfare Impacts of Road Construction Using a Public -Private Partnership: A CGE Analysis of a Project

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  • Sameer REGE
  • Mario FORTUNA

Abstract

This paper analysis the welfare changes arising from a road project, undertaken as a public-private partnership, measured as the variation in utility, using a sequentially dynamic general equilibrium model. To circumvent the budget restriction imposed by the central government, the Azorean Regional Government embarked on a partnership to build a major road. The initial investment is supported by the private partner and, subsequently, amortised over a period. Payments are simulated through an increase in income taxes or a reduction in transfer payments, while taking into account the impact of the more efficient infrastructure through a reduction in the transport margins. It is found that under any type of repayment scheme the welfare benefits do not justify the road construction thus making it a poor investment decision.

Suggested Citation

  • Sameer REGE & Mario FORTUNA, 2013. "Welfare Impacts of Road Construction Using a Public -Private Partnership: A CGE Analysis of a Project," ERSA conference papers ersa13p89, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa13p89
    as

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    References listed on IDEAS

    as
    1. Burkhard Heer & Alfred Maußner, 2024. "Dynamic General Equilibrium Modeling," Springer Texts in Business and Economics, Springer, edition 3, number 978-3-031-51681-8, December.
    2. Adelman, Irma & Robinson, Sherman, 1989. "Income distribution and development," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 19, pages 949-1003, Elsevier.
    3. Sanz-de-Galdeano, Anna & Turunen, Jarkko, 2006. "The euro area wage curve," Economics Letters, Elsevier, vol. 92(1), pages 93-98, July.
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    More about this item

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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