The impacts of highways on firm size distribution: Evidence from China

Jiangteng Zhou

Growth and Change, 2023, vol. 54, issue 2, 482-506

Abstract: This paper examines the impact of highway construction on the size distribution of manufacturing firms using Chinese firm and highway network data. I construct instrumental variables using historical and counterfactual road approaches to identify the causal effects of highway construction. I find that highway construction can increase firm size dispersion and market concentration. Areas near highways have a higher number of firms, more outsourcing activities, and more large firms; while areas further from highways have a higher share of new entry firms.

Date: 2023
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