The structure employed is a small open economy, with one city and a rural hinterland, two traded goods, a transport sector, two specific factors, and mobile labour. A socially profitable programme will promote not only internal, but also external trade. Theory and numerical examples indicate...

Do 'local' methods of evaluation, such as partial equilibrium analysis at market prices or estimation of shadow prices, provide reliable assessments of a large rural roads programme's social profitability? Consider a small open economy with one city and a rural hinterland, two traded goods, two...