The impact of a rise in transportation costs on firm performance and behaviour

Catarina Branco, Dirk Dohse, João Santos and José Tavares ()

No 167, GEE Papers from Gabinete de Estratégia e Estudos, Ministério da Economia

Abstract: This paper uses micro-level data encompassing the universe of Portuguese private firms for the period 2006-2016 to analyse the effect of the introduction of tolls on previously toll-free highways. To establish causality, we rely on a natural experiment which resulted from Portuguese authorities being forced to in- crease these transportation costs in some highways during the sovereign debt crisis. Difference-in-differences results show a 10.7% decrease of turnover in firms located in affected municipalities vis-Ã -vis firms in the remaining areas, on average. Firm profits were also severely hit and reduced by more than 15%. Both sales and purchases to/from the internal market and abroad (especially to/from EU countries) were affected. Furthermore, employment reduced 2% in treated areas. Importantly, our findings do not uncover induced inter-regional firm migration, suggesting that the tolls have induced a substantial net loss to the Portuguese economy.

Keywords: Road tolls; Turnover; Expenses; Value Added; Exports; Imports; Competitiveness; Portugal (search for similar items in EconPapers)
JEL-codes: L25 R12 R48 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2022-09, Revised 2022-09
New Economics Papers: this item is included in nep-eff, nep-eur, nep-geo, nep-int, nep-sbm, nep-tre and nep-ure
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https://www.gee.gov.pt//RePEc/WorkingPapers/GEE_PAPERS_167.pdf First version, 2022 (application/pdf)

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