Koster, HansR.A., Tabuchi, T. and Thisse, J.F. (2022). To be connected or not to be connected? The role of long-haul economies Journal of Economic Geography, 22(4):711--753.
-
Affiliated author
-
Publication year2022
-
JournalJournal of Economic Geography
We investigate whether localities gain or lose employment when there are connected to a transportation network, such as a high-speed railway line. We argue that long-haul economies - implying that the marginal transportation cost decreases with network distance - play a pivotal role in understanding the location choices of firms. We develop a new spatial model to show that improvements in transportation infrastructure have nontrivial impacts on the location choices of firms. Using data on Japan's Shinkansen, we show that 'in-between' municipalities that are connected to the Shinkansen witness a sizable decrease in employment.