Redistributing Transportation Costs

Abstract

When poverty is correlated with supply costs across space, firms may charge the poor higher prices. To resolve such inequality, the government, for example, can provide transportation subsidies to firms. How might such government programs be designed? What issues arise in the government’s interaction with firms? And what are the welfare effects of monitoring firms? We study these issues by examining Ghana's Unified Petroleum Pricing Fund Program -- the only scalable program we know of in the world that redistributes transportation costs to resolve inequalities.