The Welfare Effects of Transportation Infrastructure Improvements

Abstract Each year in the US, hundreds of billions dollars are spent on transportation infrastructure and hours lost traffic. We develop a quantitative general equilibrium spatial framework featuring endogenous costs traffic congestion apply it to evaluate welfare impact improvements. Our approach yields analytical expressions for between any two locations, along each link network, distribution economic activity across economy, as function underlying quality strength congestion. characterize properties such an show how can be combined with data improving segment network. Applying our both US highway network Seattle road we find highly variable returns investment different links respective networks, highlighting importance well-targeted investment.