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on Transport Economics |
| By: | Nico Voigtländer; Hans-Joachim Voth |
| Abstract: | Can infrastructure investment win "hearts and minds"? We analyze a famous case in the early stages of dictatorship – the building of the motorway network in Nazi Germany. The Autobahn was one of the most important projects of the Hitler government. It was intended to reduce unemployment, and was widely used for propaganda purposes. We examine its role in increasing support for the NS regime by analyzing new data on motorway construction and the 1934 plebiscite, which gave Hitler greater powers as head of state. Our results suggest that road building was highly effective, reducing opposition to the nascent Nazi regime. |
| Keywords: | political economy, infrastructure spending, establishment of dictatorships, pork-barrel politics, Nazi regime |
| JEL: | H54 P16 N44 N94 |
| Date: | 2014–05 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:769&r=tre |
| By: | Christopher Gedge; James W. Roberts; Andrew Sweeting |
| Abstract: | The one-shot nature of most theoretical models of strategic investment, especially those based on asymmetric information, limits our ability to test whether they can fit the data. We develop a dynamic version of the classic Milgrom and Roberts (1982) model of limit pricing, where a monopolist incumbent has incentives to repeatedly signal information about its costs to a potential entrant by setting prices below monopoly levels. The model has a unique Markov Perfect Bayesian Equilibrium under a standard form of refinement, and equilibrium strategies can be computed easily, making it well suited for empirical work. We provide reduced-form evidence that our model can explain why incumbent airlines cut prices when Southwest becomes a potential entrant into airport-pair route markets, and we also calibrate our model to show that it can generate the large price declines that are observed in the data. |
| JEL: | D43 D82 L13 L41 L93 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20293&r=tre |