This paper takes a different tack.We use a one-shot cross-sectional
data set with a novel sampling scheme. Households were surveyed in
a small, relatively homogeneous region of rural Madagascar, over
which transport costs to the same market vary tremendously. This
variation is not due to the particularities of road placement – there are
no paved roads and little motorized transport to speak of – but rather
to the impenetrable mountains that range up and down the region.
At their peak, transport costs amount to a staggering 50% of the
final market price of the primary commodity, paddy rice. Arguably, a
comparison of household behavior along this steep transport cost
gradient approximates the long-run adjustments to an exogenous
road improvement.