This paper quantifies the aggregate and regional welfare effects of the duplication of the Fernão Dias highway (BR-381), as well as its impact on the regional equity, using a spatial applied general equilibrium model, which incorporates transportation costs. The consequences in terms of efficiency and equity are quantified by simulating the travel time reduction and the freight diminution due the duplication of the highway. The general equilibrium model is specified for five industries (agriculture and living stock, mining industries, manufacturing industries, construction and services), twelve domestic regions, three external regions and two production factors (labor and other factors). In aggregate terms, the results reveal that the travel time effect does not yield social welfare gains at all, although it enhance regional income inequalities. The freight effect dominates the travel time effect in the simulations. The spatial distribution of the results, in turn, shows that the "winning" regions are those where the duplicated sections of the BR-381 highway cross.
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Length: Date of creation: 2004 Date of revision: Handle: RePEc:anp:en2004:130
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Find related papers by JEL classification: D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
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