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Consumer Benefits of Infrastructure Services

  • Carmit Shwartz

    (School of Economics, Australian School of Business, the University of New South Wales)

  • W. Erwin Diewert

    (University of British Columbia and University of New South Wales)

  • Kevin J. Fox


    (School of Economics & Centre for Applied Economic Research, Australian School of Business, the University of New South Wales)

This paper provides methodologies for evaluating consumer benefits of infrastructure services using potentially observable information. We define benefit measures for consumers and, using general principles from the index number literature, derive alternative first and second order approximations to these measures under the assumption of fixed prices for market goods and services. We then describe how the benefit measures and their associatedapproximations can be used in quantifying the economic benefits when prices are allowed to change endogenously as the provision of infrastructure services changes. In addition, under quite unrestrictive assumptions, a measure of welfare change based only on potentially observable data is derived.

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Paper provided by School of Economics, The University of New South Wales in its series Discussion Papers with number 2014-17.

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Length: 39 pages
Date of creation: Mar 2014
Date of revision:
Handle: RePEc:swe:wpaper:2014-17
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  1. Morrison, Catherine J & Schwartz, Amy Ellen, 1996. "State Infrastructure and Productive Performance," American Economic Review, American Economic Association, vol. 86(5), pages 1095-1111, December.
  2. Boisso, Dale & Grosskopf, Shawna & Hayes, Kathy, 2000. "Productivity and efficiency in the US: effects of business cycles and public capital," Regional Science and Urban Economics, Elsevier, vol. 30(6), pages 663-681, December.
  3. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  4. Seitz, Helmut, 1995. "The Productivity and Supply of Urban Infrastructures," The Annals of Regional Science, Springer, vol. 29(2), pages 121-41, May.
  5. David Albouy, 2008. "Are Big Cities Bad Places to Live? Estimating Quality of Life across Metropolitan Areas," NBER Working Papers 14472, National Bureau of Economic Research, Inc.
  6. Seitz, Helmut, 1994. "Public capital and the demand for private inputs," Journal of Public Economics, Elsevier, vol. 54(2), pages 287-307, June.
  7. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
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