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Creation and Destruction of Comparative Advantage by Public Investment in the Transport Infrastructure of Transit Economies and by Environmental Taxes

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  • Ziesemer, Thomas

    (MERIT)

Abstract

In this paper we show conditions under which the accumulation of public infrastructure capital over time may create the comparative advantage of the production of transport services and destroy that of the production of goods in a market equilibrium of a transit economy. We also show conditions under which it will not change comparative advantage. Moreover, we also show the conditions under which an environmental tax on pollution from transport will shift the specialization back to the production of goods. In the model used, specialization is determined by: the productivity of the sectors; the transit volume; the taxes raised for the use of roads; the world market prices of goods and transport services; and environmental taxes. Gains from trade are analysed and comparative-static properties of globalization and tax policy are discussed.

Suggested Citation

  • Ziesemer, Thomas, 1998. "Creation and Destruction of Comparative Advantage by Public Investment in the Transport Infrastructure of Transit Economies and by Environmental Taxes," Research Memorandum 019, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
    • Handle: RePEc:unm:umamer:1998019
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    File URL: https://www.merit.unu.edu/publications/rmpdf/1998/rm1998-019.pdf
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    1. Glomm, Gerhard & Ravikumar, B., 1997. "Productive government expenditures and long-run growth," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 183-204, January.
    2. Mainwaring, L, 1986. "The Theory of International Transport Costs with Tradeable Intermediate Goods," Scottish Journal of Political Economy, Scottish Economic Society, vol. 33(2), pages 111-123, May.
    3. Casas, F R, 1983. "International Trade with Produced Transport Services," Oxford Economic Papers, Oxford University Press, vol. 35(1), pages 89-109, March.
    4. Brezis, Elise S & Krugman, Paul R & Tsiddon, Daniel, 1993. "Leapfrogging in International Competition: A Theory of Cycles in National Technological Leadership," American Economic Review, American Economic Association, vol. 83(5), pages 1211-1219, December.
    5. McMillan, John, 1978. "A Dynamic Analysis of Public Intermediate Goods Supply in Open Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 19(3), pages 665-678, October.
    6. Casas, Fran?ois R. & Choi, E. Kwan, 1989. "Transport Costs and Immiserizing Growth Under Variable Returns to Scale," Staff General Research Papers Archive 10599, Iowa State University, Department of Economics.
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    Cited by:

    1. Thomas H.W. Ziesemer, 2014. "Country terms of trade: trends, unit roots, over-differencing, endogeneity, time dummies, and heterogeneity," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(6), pages 767-796, September.

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