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30080-1 Report Abstract

Transportation and Manufacturing Productivity

Nat Pinnoi, Texas A&M University System, October 1993, 49 pp.

The report investigates the contribution of publicly owned highways and streets to manufacturing cost structure. Specifically, a short-run variable cost function is specified and estimated. Highways and streets capital is treated as one of the fixed inputs in the cost function. We discover that highways and streets capital provides positive marginal benefits to firms in the manufacturing industry. That is, an increase in highways and streets capital reduces manufacturing costs. Subsequently, the productivity in the manufacturing sector is improved. Therefore, a conventional benefit-cost analysis of a specific transportation project should take into account the potential productivity benefit.

Keywords: Cost Analysis, Transportation Investment, Output per Worker, Internal Rate of Return, Shadow Prices and Shares

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Reference Report #30080-1