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Optimal Transport Networks in Spatial Equilibrium

Objective

Every year, the world economy invests a large amount of resources to improve or develop transport infrastructure. How should these investments be allocated to maximize social welfare? In this proposal, I propose to develop and apply new methods to study optimal transport networks in general-equilibrium models of international trade, urban economics and economic geography. The methodology will build on recent work (Fajgelbaum and Schaal, 2017), in which my coauthor and I studied the network design problem in a general neoclassical trade framework.

In the first project, I develop a new framework to analyze optimal infrastructure investment in an urban setting. The model features people commuting between residential areas and business districts as well as a choice over the mode of transportation. We plan to evaluate the framework to historical data about specific cities.

In the second project, I propose and implement an new algorithm to compute optimal transport networks in the presence of increasing returns to transport, a likely prominent feature of real-world networks. The algorithm applies a branch-and-bound method in a series of geometric programming relaxations of the problem.

In the third project, I study the dynamic evolution of actual transport networks using satellite data from the US, India and Mexico. In the spirit of Hsieh and Klenow (2007), I use the model to measure distortions in the placement of roads between rich and poor countries.

In the fourth project, I study the inefficiencies and welfare losses associated with political economy frictions among governments and planning agencies. I use the model to identify inefficiencies and relate them to measures of institutions and political outcomes.

In the final project, I propose a new explanation behind the Zipf’s law distribution of city sizes. I show that Zipf’s law may result from particular topological properties of optimal transport networks that allocate resources efficiently in space.

Field of science

  • /social sciences/economics and business/business and management/commerce
  • /social sciences/economics and business/economics
  • /social sciences/social and economic geography/cultural and economic geography
  • /social sciences/economics and business/economics/political economy
  • /social sciences/economics and business
  • /social sciences/law
  • /social sciences/social and economic geography/transport

Call for proposal

ERC-2018-STG
See other projects for this call

Funding Scheme

ERC-STG - Starting Grant

Host institution

Centre de Recerca en Economia Internacional (CREI)
Address
Ramon Trias Fargas 25/27
08005 Barcelona
Spain
Activity type
Research Organisations
EU contribution
€ 887 500

Beneficiaries (1)

Centre de Recerca en Economia Internacional (CREI)
Spain
EU contribution
€ 887 500
Address
Ramon Trias Fargas 25/27
08005 Barcelona
Activity type
Research Organisations