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From Social Savings to Spatial Equilibrium: Evaluating Transportation Improvements in Quantitative Spatial Models

Author

Listed:
  • Treb Allen
  • Simon Fuchs
  • Woan Foong Wong

Abstract

How do we evaluate the welfare gains from transport infrastructure investment? We present a quantitative spatial framework that integrates traffic and economic responses to infrastructure improvements and derives the elasticity of aggregate welfare to changes in the transportation network. The resulting formula extends the traditional “social savings” method to incorporate route and mode choice, agglomeration and dispersion externalities, and traffic congestion. We apply the formula to the U.S. freight network and assess the benefits of reducing costs on each segment of the U.S. Interstate Highway System. The traditional and extended measures are closely related overall, but they differ in the level of estimated gains and in the ranking of some highly valued links. Where the rankings differ, network position determines how congestion and spatial adjustment alter a link’s measured benefit.

Suggested Citation

  • Treb Allen & Simon Fuchs & Woan Foong Wong, 2026. "From Social Savings to Spatial Equilibrium: Evaluating Transportation Improvements in Quantitative Spatial Models," CESifo Working Paper Series 12901, CESifo.
    • Handle: RePEc:ces:ceswps:_12901
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    References listed on IDEAS

    as
    1. Yuhei Miyauchi & Kentaro Nakajima & Stephen J Redding, 2025. "The Economics of Spatial Mobility: Theory and Evidence Using Smartphone Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 140(4), pages 2507-2570.
    2. repec:cup:jechis:v:22:y:1962:i:02:p:163-197_06 is not listed on IDEAS
    3. Ducruet, César & Juhász, Réka & Nagy, Dávid Krisztián & Steinwender, Claudia, 2024. "All aboard: The effects of port development," Journal of International Economics, Elsevier, vol. 151(C).
    4. Melanie Morten & Jaqueline Oliveira, 2024. "The Effects of Roads on Trade and Migration: Evidence from a Planned Capital City," American Economic Journal: Applied Economics, American Economic Association, vol. 16(2), pages 389-421, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • R42 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government and Private Investment Analysis; Road Maintenance; Transportation Planning

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