What are the marginal benefits to industry sectors and the aggregate economy of an increase in highway capital?
The marginal benefit of highway capital is measured in terms of its initial cost-reducing impact (i.e., the productivity effect). The magnitude of cost reduction depends on the industry’s elasticity of cost with respect to highway capital and the industry’s total costs of production relative to the size of the highway capital stock. The current research indicates the marginal benefits of highway capital are positive in all but three fairly small industries. Marginal benefit estimates can be interpreted as a measure of producer’s “willingness to pay” for an additional unit of highway capital and vary considerably across industries and over time. For most industries, particularly manufacturing industries, the marginal benefits of a $1.00 increase in highway capital range between 0.20 and 0.60. Industry marginal benefit estimates can be translated into a dollar value of cost reduction in each industry for a given amount of highway capital spending. The simplest way to do this is to multip
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