Paper of Alexander Tarasov in Journal of Urban Economics

Congratulations to Alexander Tarasov, Head and Associate Professor of the Department of Theoretical Economics, on the publication of his paper "Trade and the spatial distribution of transport infrastructure" in the Journal of Urban Economics .

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  inter national 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.

The full paper is available here: https://www.sciencedirect.com/science/article/pii/S009411902200050X?via%3Dihub