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A general equilibrium framework is used in this paper to study the regional economic effects of infrastructure improvements designed to reduce the costs of cross-border inter-regional trade. The analysis focuses on the economic benefits from the Second Mekong International Bridge between Mukdahan Province in Thailand and Savannakhet Province in the Lao People's Democratic Republic. The results suggest that in the short run, the kind of transport cost reductions that are consistent with improvement of interregional transport facilities will produce a modest increase in inter-regional trade volumes in both directions and a small increase in real consumption in both regions.
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