The allocation of transport infrastructure in Swedish municipalities: Welfare maximization, political economy or both?

Abstract

This paper compares models for explaining the volume of transport investments in Swedish municipalities: 1. by the planned projects’ welfare consequences, 2. in terms of the district demand (the common pool) model, namely a municipality's share of the cost towards the investment and 3. electoral concerns and/or lobbying, as described by a swing voter model. We find that the welfare only hypothesis has little explanatory power. The district demand model explains the investment volume in rail projects, while the swing voter model explains road investment better. Lobbying does not seem to have any impact on the investment volume. Finally, we find that including a measure of the welfare in the political economy models greatly enhances the models’ explanatory power. Our main conclusion is that future analyses of what drives the allocation of resources for transport infrastructure should consider aspects related to both political economy, welfare, and the transport mode.