We estimate to what extent bridges in Mozambique lead to transport cost reductions and attribute these reductions to road distance and road quality. The applied methodology allows for potentially oligopolistic traders with spatially varying mark-ups. For identification we exploit the introduction of a road bridge over the Zambezi river, jointly with the (completion of the) rehabilitation of a railway bridge. These events create variation in trading itineraries between markets. Estimations are based on monthly maize prices, in 24 markets, for five years before and after the (re)introduction of the bridges. Estimates of the reduction of transport costs, averaged over itineraries, vary from 6% to 10%. Results are robust for non-random bridge placement and various other threats. Reduction in transport costs for particular itineraries varies slightly more, from 6% to 21% and is roughly for two-third due to road distance and for one-third due to road quality, and supported by observed transport cost data.
# 17-117/V (2017-12-08; 2018-08-08)
- Wouter (W.) Zant, VU Amsterdam, The Netherlands; Tinbergen Institute, The Netherlands
- agricultural markets, transport costs, bridges, Mozambique, sub-Sahara Africa
- JEL codes:
- D23, D61, O13, O18, Q13, R41