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TDPE presents: Gabriel Felbermayr

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Gabriel Felbermayr on Trade and the Spatial Distribution of Transportation Infrastructure

Gabriel Felbermayr,  University of Munich and Ifo Institute

Authors: Gabriel Felbermayr and Alexander Tarasov

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 international 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 a fifth of the border effect identified in a conventionally specified gravity regression. The framework sheds light on the welfare costs of second best investment schedules, on the effects of intercontinental trade or of privatized infrastructure provision.

Gabriel Felbermayr is Director of the Ifo Center for International Economics at the Ifo Institute, Munich and Professor of Economics at the University Munich. His research interests are in international trade agreements, trade and labor market outcomes, and trade and the environment. His work has been published in well-known academic economics journals such as the Review of Economics and Statistics, the Journal of International Economics, the Journal of Economic Theory etc.

Sponsored by the Trade Development and Political Economy Program at the Moynihan Institute of Global Affairs 

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