Bridges

Tinbergen Institute Discussion Paper 2017-117/V

55 Pages Posted: 12 Dec 2017 Last revised: 18 Apr 2019

See all articles by Wouter Zant

Wouter Zant

Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Date Written: April 1, 2019

Abstract

We use spatial maize prices to estimate to what extent bridges in Mozambique lead to transport cost reductions and attribute these reductions to road distance and road quality. The applied methodology allows for potentially oligopolistic traders with spatially varying mark-ups. For identification we exploit the introduction of a road bridge over the Zambezi river, which creates variation in trading itineraries between markets. Estimations are based on monthly maize prices, in 24 markets, for five years before and after the introduction of the bridge. Estimates of the reduction of transport costs, averaged over itineraries, vary from 6% to 10%. Results are robust for non-random bridge placement and various other threats, and supported by observed transport cost data. Reduction in transport costs for particular itineraries varies more (up to 21%) and is roughly for two-third due to road distance and for one-third due to road quality.

Keywords: agricultural markets, transport costs, bridges, Mozambique, sub-Sahara Africa

JEL Classification: D23, D61, O13, O18, Q13, R41

Suggested Citation

Zant, Wouter, Bridges (April 1, 2019). Tinbergen Institute Discussion Paper 2017-117/V, Available at SSRN: https://ssrn.com/abstract=3084642 or http://dx.doi.org/10.2139/ssrn.3084642

Wouter Zant (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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