To be connected or not to be connected? The role of long-haul economies

Hans Koster and Jacques Thisse
Authors registered in the RePEc Author Service: Takatoshi Tabuchi

No 15905, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We investigate what regions are the winners and losers from large transportation infrastructure improvements. We argue that long-haul economies - implying that the marginal transportation cost decreases with distance - play a pivotal role in understanding the location choices of firms. Using data from Japan and the Netherlands, we first establish that long-haul economies are an important feature of modern transportation networks. Then, we develop a simple model to show that improvements in transportation infrastructure have non-trivial impacts on the location choices of firms. While these investments are often beneficial to large regions, they may be detrimental to small intermediate regions, implying job losses. Using data on Japan's Shinkansen, we confirm that 'in-between' municipalities that are connected to the HSR witness a sizable decrease in employment.

Keywords: Accessibility; Transport infrastructure; Long-haul economies; Regional development (search for similar items in EconPapers)
JEL-codes: H40 O18 R30 R42 (search for similar items in EconPapers)
Date: 2021-03
New Economics Papers: this item is included in nep-geo, nep-tre and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Journal Article: To be connected or not to be connected? The role of long-haul economies (2022)
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