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Estimating the Impact of Highways on Average Travel Velocities and Market Size

Author

Listed:
  • Michael L. Lahr

    (Rutgers University, Center for Urban Policy Research)

  • Rodrigo Duran

    (Rutgers University, Center for Urban Policy Research)

  • Anupa Varughese

    (Rutgers University, Center for Urban Policy Research)

Abstract

In this paper we examine the link between additions to highway infrastructure and development of a market area. We do so by first relating highway travel speeds to added highway-mileage and then relating travel speed to the size of the market area. This approach bypasses issues in the public finance literature that derive from estimates of highway infrastructure spending. Also, rather than examining the effects of improved transportation efficiency on enhancements of productivity, this research examines their effect on enhancements in demand for local production. Our thought, which is borne out in the literature, is that industry-level productivity in a metropolitan area may be improved only marginally by lower delivered prices of inputs due to very localized improvements in the freight transportation system. On the other hand, the market for locally produced goods and services will expand somewhat uniformly across industries due to generally improved traffic movements in a metropolitan area. By applying this approach to data from the Texas Transportation Institute, we find a significant but small positive effect of highways and arterials (as opposed to other roadways) on changes in metropolitan urbanized area and metropolitan population change. This suggests that demand for local production may well be enhanced by expansions of highway and principal arterials infrastructure.

Suggested Citation

  • Michael L. Lahr & Rodrigo Duran & Anupa Varughese, 2004. "Estimating the Impact of Highways on Average Travel Velocities and Market Size," Urban/Regional 0403009, EconWPA.
  • Handle: RePEc:wpa:wuwpur:0403009
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    References listed on IDEAS

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    Cited by:

    1. Stephen Gibbons & Teemu Lyytikäinen & Henry Overman & Rosa Sanchis-Guarner, 2012. "New Road Infrastructure: the Effects on Firms," SERC Discussion Papers 0117, Spatial Economics Research Centre, LSE.
    2. Guy Michaels, 2008. "The Effect of Trade on the Demand for Skill: Evidence from the Interstate Highway System," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 683-701, November.
    3. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2016. "Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing," Economic Journal, Royal Economic Society, vol. 126(591), pages 317-357, March.
    4. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2013. "Highway to success in India : the impact of the golden quadrilateral project for the location and performance of manufacturing," Policy Research Working Paper Series 6320, The World Bank.
    5. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2013. "The golden quadrilateral highway project and urban/rural manufacturing in India," Policy Research Working Paper Series 6620, The World Bank.

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    JEL classification:

    • R - Urban, Rural, Regional, Real Estate, and Transportation Economics

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