Does high-speed railway affect the cost behavior of tourism firms? Evidence from China

Fangjun Wang, Lizhu Ma, Baojun Gao and Yang S Liu

Tourism Economics, 2024, vol. 30, issue 1, 212-235

Abstract: Cost stickiness, which is also termed cost asymmetry, describes the asymmetric relationship between revenue and cost. In this study, we examine whether high-speed railway (HSR) connection affects the cost stickiness of tourism firms. Employing a sample of 324 Chinese tourism firms from 2003 to 2018 and applying a difference-in-difference (DID) method, we find that the cost stickiness of tourism firms increases after HSR connection. Our results also reveal that the relationship between HSR connection and cost stickiness is more pronounced in firms with higher free cash flow (FCF), higher labor costs, and in state-owned enterprises (SOEs). Our research advances an in-depth understanding of the cost behavior in tourism firms and sheds light on the policy effect of HSR connection.

Keywords: high-speed railway; cost asymmetry; cost stickiness; difference-in-difference (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:sae:toueco:v:30:y:2024:i:1:p:212-235

DOI: 10.1177/13548166221150698

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