IDEAS home Printed from
   My bibliography  Save this paper

Strategic competition with public infrastructure; ineffective and unwelcome?


  • Richard Nahuis

    (CPB Netherlands Bureau for Economic Policy Analysis)

  • Paul Tang

    (CPB Netherlands Bureau for Economic Policy Analysis)


Countries invest in international infrastructure in an effort to attract firms. Acquiring the position of a hub would make this effort successful. We use a model of international trade with monopolistic competition, increasing returns to scale and transport costs to analyse policy competition through infrastructure investment. For a small or backward country the strategic effect of attracting firms is less important than for large or advanced countries. A country that acquires a hub-position sees its welfare improve. The other countries may gain or lose; they benefit from cheaper international trade, but suffer from the relocation of firms. In the case of line infrastructure the spoke countries will invest to eradicate the hub position, whereas in the case of point infrastructure they will not. Policy competition is more likely to deliver too much infrastructure investment when transport costs are low and the strategic effect is more important. A globalising world may thus call for international co-ordination.

Suggested Citation

  • Richard Nahuis & Paul Tang, 2002. "Strategic competition with public infrastructure; ineffective and unwelcome?," CPB Discussion Paper 8, CPB Netherlands Bureau for Economic Policy Analysis.
  • Handle: RePEc:cpb:discus:8

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Machiel Dijk & Richard Nahuis & Daniel Waagmeester, 2006. "Does Public Service Broadcasting Serve The Public? The Future of Television in the Changing Media Landscape," De Economist, Springer, vol. 154(2), pages 251-276, June.

    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • H4 - Public Economics - - Publicly Provided Goods
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpb:discus:8. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.