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The politics of infrastructure investment: The role of product market competition

The politics of infrastructure investment

Arghya Ghosh and Kieron Meagher

In spatial competition, public infrastructure plays a crucial role in determining product market outcomes. In our model, consideration of infrastructure’s impact on the product market drives the preferences of consumers in their dual role as voter/taxpayers. The spatial hetero-geneity of consumers produces conflicting political interests and in many cases inefficient outcomes.

However across both exogenous and endogenous market environments productmarket competition consistently leads to higher levels of publicly funded infrastructure than monopoly/collusion. Furthermore, competition’s boost to the popular support for infrastructure investment is often excessive while monopoly leads to underinvestment.

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Updated:   18 February 2017 / Responsible Officer:  CBE Communications and Outreach / Page Contact:  College Web Team