Market Potential, Road Accessibility, and Firm Births: Evidence From 20 Years of Road Investment

Mauricio S. de Carvalho, Patrícia C. Melo, Bruno Rocha, Isabel Proença and João de Abreu e Silva

Journal of Regional Science, 2025, vol. 65, issue 4, 984-1016

Abstract: This paper investigates the causal effects of road accessibility, measured by market potential, on firm births in Portuguese municipalities between 1991 and 2016, a period marked by significant road improvements. We address the endogeneity of market potential by employing instrumental variables within Poisson Pseudo‐maximum Likelihood estimates with fixed effects, which we refer to as “non‐local time‐variant historical instruments.” Our estimated elasticities for firm births range from 1.6 to 1.9 for the 1‐year interval and 1.2–1.3 for the 5‐year interval. Additionally, we find a greater positive effect on firm births when excluding the metropolitan areas of Lisbon and Porto, which is indicative evidence of a heterogeneous spatial effect. We also find that the impact of the enlarged market potential is heterogeneous across sectors. Our results are robust to changes in model specification and the usage of alternative measures of the instruments.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jors.12770

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jregsc:v:65:y:2025:i:4:p:984-1016

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0022-4146

Access Statistics for this article

Journal of Regional Science is currently edited by Marlon G. Boarnet, Matthew Kahn and Mark D. Partridge

More articles in Journal of Regional Science from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().