Expanding Footprints: The Impact of Passenger Transportation on Corporate Locations

2023-02-02 Publications

Photo by 终有 那天 on Unsplash

This article investigates how transportation networks shape firms' geographic footprint by reducing monitoring costs of distant investments. Exploiting the staggered expansions of China's passenger high-speed rail (HSR) network, the authors document that the amount of intercity investment between a pair of cities increases by 45% with the introduction of an HSR line connecting the cities. They enhance the causal inference by applying high-dimensional fixed effects, and focusing on city pairs that are "accidentally" connected in the network. The HSR effect is the strongest in industries that require on-site monitoring, as well as for controlling stakes in large distant investments.

Yatang Lin
Assistant Professor, Department of Economics
Assistant Professor, Division of Public Policy
Assistant Professor, Division of Social Science
Yatang Lin received her Ph.D. in Economics from London School of Economics in 2017 and joined HKUST…
Yu Qin
Department of Real Estate, NUS Business School, National University of Singapore, Singapore
Johan Sulaeman
Sustainable and Green Finance Institute (SGFIN) and NUS Business School, National University of Singapore, Singapore
Jubo Yan
School of Social Sciences, Nanyang Technological University, Singapore
Jialiang Zhang
School of Economics, Central University of Finance and Economics, China

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