Models and Realities: Choosing Transit Projects for New York City

This chapter discusses the main results of research on the relation of infrastructure and the productivity of firms at the aggregated regional level. It focuses on the impact of transport infrastructure on the location behaviour of individual firms. In many countries debates are taking place on the economic impacts of infrastructure improvements. At the aggregate level impact of infrastructure on regional economic growth is studied by inter alia, the production function approach and the interregional trade models. An example of revealed preference models are regional location models, estimated ex post on the basis of actual behaviour of entrepreneurs in the past. These models try to explain investment level of firms or development in employment by a number of regional locational factors such as agglomeration effects, labour costs, investment subsidies, sectoral structure, accessibility of markets, and so on. The chapter presents a case study for the Netherlands, in which it overcomes some problems that sometimes occur with stated preference studies.