The Welfare Effects of Transportation Infrastructure Improvements

  title={The Welfare Effects of Transportation Infrastructure Improvements},
  author={Treb Allen and Costas Arkolakis},
  journal={Econometric Modeling: Macroeconomics eJournal},
We develop a general equilibrium geographic framework to characterize the welfare effect of transportation infrastructure investments. We tackle three distinct but conflating challenges: First, we offer an analytical characterization of the routing problem and, in particular, how infrastructure investment between any two connected locations decreases the total trade costs between all pairs of locations. Second, we characterize how this cost reduction affects welfare within a standard general… 
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