Improved roads reduce transportation cost and time taken to go to markets. Low
transportation costs equalize prices across markets that are close to each other and are
connected by good quality roads. Road improvement reduces transportation cost of rice,
fertilizers, pesticides and seeds. Ali (2010) provides evidence that rural road improvement
reduced per maund (40 kilograms) transportation cost of fertilizer, seed and rice for
households that received road improvement in Bangladesh. Reduced transportation cost
decreases net input price (price paid plus transportation cost) of seeds, fertilizers, and
pesticides and increases the net output price of rice (selling price of rice minus transport
cost) that farmers receive.