Abstract
The purpose of this paper is twofold. Firstly, we constructed the model to discuss the two-regional equilibrium model for evaluate to the welfare losses of transportation infrastructure improvement projects. Secondly, we utilized the ADD measure and its second order approximation to analyse the approximity of the equivalent variation within the context of two-regional general equilibrium model. In particular, we clarified the limit of overestimation or underestimation of ADD second order approximation in regard to sensitivity analysis of parameters of cost function. Concluding, we could see the accuracy and availability of the ADD measure and its second order approximation.
