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

  • 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)

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.

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Paper provided by EconWPA in its series Urban/Regional with number 0403009.

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Length: 21 pages
Date of creation: 25 Mar 2004
Date of revision:
Handle: RePEc:wpa:wuwpur:0403009
Note: Type of Document - pdf; pages: 21
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  1. Nadiri, M. Ishaq & Mamuneas, Theofanis P., 1991. "The Effects of Public Infrastructure and R&D Capital on the Cost Structure and Performance of U.S. Manufacturing Industries," Working Papers 91-57, C.V. Starr Center for Applied Economics, New York University.
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  12. Boarnet, Marlon G. & Haughwout, Andrew F., 2000. "Do Highways Matter? Evidence and Policy Implications of Highways' Influence on Metropolitan Development," University of California Transportation Center, Working Papers qt5rn9w6bz, University of California Transportation Center.
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  17. Garcia-Mila, Teresa & McGuire, Therese J., 1992. "The contribution of publicly provided inputs to states' economies," Regional Science and Urban Economics, Elsevier, vol. 22(2), pages 229-241, June.
  18. Douglas R. Dalenberg & Mark D. Partridge & Dan S. Rickman, 1998. "Public Infrastructure: Pork or Jobs Creator?," Public Finance Review, , vol. 26(1), pages 24-52, January.
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