Abstract

Transport connectivity is among the most important factors in increasing firm productivity and accelerating economic development. The literature generally supports the idea of agglomeration economies, although there is little evidence of their effectiveness in Africa. There are often empirical challenges, such as spatial externalities and endogeneity of infrastructure development. Using firm registry data in Liberia, this study used the instrumental variable spatial autoregressive model to examine the effects of transport connectivity on firms' decisions on where to locate. The study found significant spatial autocorrelation and possible endogeneity related to transport infrastructure, and that firms are more likely to be located where market accessibility is better. The data indicated strong agglomeration economies, indicating that the primary city, Monrovia, is likely to continue to grow and attract more people and firms, and that secondary cities can also grow with greater transport connectivity between populated areas, such as district centers. Document type: Book

Abstract

Significant efforts to incentivize the uptake of energy efficient vehicles (EEVs) are evident across the globe. Given EEV markets are dynamic, and consumer demand may fluctuate in response to incentives, this may also lead to other market forces influencing prices. An analysis of EEV incentives, therefore, must account for the possible endogeneity between demand and pricing. Here we estimate the effects of different types of incentives on the demand and price premiums of a specific group of EEVs: plug-in and conventional hybrid electric vehicles (HEVs). For the first time we dis-entangle the endogeneity between HEV demand and price, using error components three-stage least squares (EC3SLS) regression, and establish that increased HEV price premiums lead to reduced demand. In turn, we also establish that increased HEV demand leads to lower price premiums. Additionally, we find that one-off subsidies are associated with higher consumer demand, however, unlike other types of incentives, are also associated with higher HEV price premiums. This finding suggests that HEV manufacturers and/or dealers are absorbing a significant monetary benefit from one-off subsidies, raising a question regarding the appropriateness of HEV subsidies, particularly in non-HEV manufacturing nations. We also find that higher fuel prices are associated with higher HEV demand and price premiums. Document type: Article