Competition and the Welfare Gains from Transportation Infrastructure: Evidence from the Golden Quadrilateral of India

59 Pages Posted: 24 May 2016

See all articles by Jose Asturias

Jose Asturias

Georgetown University School of Foreign Service in Qatar

Manuel García-Santana

Barcelona Graduate School of Economics (Barcelona GSE); Centre for Economic Policy Research (CEPR)

Roberto Ramos Magdaleno

Banco de España

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Date Written: May 2016

Abstract

A significant amount of resources is spent every year on the improvement of transportation infrastructure in developing countries. In this paper, we investigate the effects of one such large project, the Golden Quadrilateral in India, on the income and allocative efficiency of the economy. We do so using a quantitative model of internal trade with variable markups. We find real income gains of 2.71% in the aggregate and that allocative efficiency accounts for 8% of these gains. The importance of allocative efficiency varies greatly across states, and can account for up to 19% of the overall gains. Thus, allocative efficiency can play an important role in determining both the size and distribution of gains from new infrastructure.

Suggested Citation

Asturias, Jose and García-Santana, Manuel and Ramos Magdaleno, Roberto, Competition and the Welfare Gains from Transportation Infrastructure: Evidence from the Golden Quadrilateral of India (May 2016). CEPR Discussion Paper No. DP11283, Available at SSRN: https://ssrn.com/abstract=2783283

Jose Asturias (Contact Author)

Georgetown University School of Foreign Service in Qatar ( email )

Education City
Al Huqoul St
Doha
Qatar

Manuel García-Santana

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Roberto Ramos Magdaleno

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

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