Measurement of the Economic Benefits of Infrastructure Services

This research was supported by the World Bank and the Social Sciences and Humanities R~search Council of Canada. Neither institution is responsible for the views expressed in this paper. The author is indebted to V. Corbo, A. Haymer, Y. Kanemoto, K. Lee, K. Mera, Hal Varian and A. Walters for helpful comments and to Elizabeth Lambert, Shehnaz Motani', and Jeanette Leigh Paisley for excellent typing services. I would like to dedicate this book to my wife, Virginia. TABLE OF CONTENTS 1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. A Simple Producer Benefit Measure . . . . . . . 8 3. Willingness to P~v Functions and Marginal Cost Functions 15 4. Approximate Benefit Measures 30 5. Problems with the Producer Benefit Measure ! 41 5. 1. Static versus Dynamic Benefit Measures 41 5. 2. The Problem of Endogenous Prices for Local Goons 48 5. 3. The Neglect of Consumer Benefits' 56 6. Alternative Approaches to Benefit Measurement 70 6. 1. The Questionnaire or Sample Survey Approach 70 6. 2. Ex Post Accounting Approaches 72 6. 3. Engineering and Mathematical Programming Approaches 74 6. 4. The Applied General Equilibrium Modelling Approach ~ 75 6. 5. The Differential Approach 77 6. 6. The Econometric Approach . . . . . . 79 7.