Paving the Road towards Efficiency: a Case Study of Hangzhou Bay Bridge

Transportation infrastructure networks are important for regional development and affect the efficiency of trade and regional cooperation. By establishing a three-city model, this paper identifies the effect of changing the transportation network (i.e., cities located at the centre of a transportation network with locational advantages that diminish with the flattening of the network structure). Constructing transportation lines between non-central cities promotes the development of these cities and negatively affects the central city simultaneously. This paper verifies the existence of this effect through the representative case of the Hangzhou Bay Bridge: the two non-central cities connected by the bridge experienced growth in their economic performance, while the central city experienced a decline in performance. The welfare analysis of this case shows that although structural changes in the transport network had heterogeneous effects on the central and non-central cities, welfare improvements were achieved overall. The results of this study suggest that planners of transportation infrastructure could achieve Karldor-Hicks improvements in total welfare and reductions in regional development gaps by optimising a transportation network structure within a certain range.