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Do firms flee traffic congestion?

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  • Sweet, Matthias N.

Abstract

Much transport policy aims to use congestion relief measures to support economic activity, but planners know relatively little about how individual firms respond to traffic congestion. This study helps fill this gap by exploring individual firm location responses to traffic congestion within the Philadelphia metropolitan area between 2003 and 2007. This study tests whether existing, basic-industry firms flee congested areas to minimize exposure to the congestion externality. Relocation responses are estimated and compared for five separate industries (finance and insurance, health care, manufacturing, real estate and leasing, and wholesale trade) using firm-level data collected by InfoUSA and obtained from ESRI. Results suggest that congestion influences firm location decisions, but that the scale of congestion is important. While firms appear to relocate out of areas with high regionally-scaled congestion, areas with high local congestion are associated with a lower likelihood of relocating. In sum, while regional congestion appears to be a drag, local congestion appears to function as an amenity – implying that there is truth in the competing notions among engineers and economists of congestion as a diseconomy and among urban designers of congestion as an amenity.

Suggested Citation

  • Sweet, Matthias N., 2014. "Do firms flee traffic congestion?," Journal of Transport Geography, Elsevier, vol. 35(C), pages 40-49.
    • Handle: RePEc:eee:jotrge:v:35:y:2014:i:c:p:40-49
    DOI: 10.1016/j.jtrangeo.2014.01.005
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    2. Ioannis Baraklianos & Louafi Bouzouina & Ouassim Manout & Patrick Bonnel, 2018. "To what extent do location choices of new and relocating economic establishments differ in terms of preference for accessibility?," Working Papers hal-01801448, HAL.
    3. McLeod, Sam & Schapper, Jake H.M. & Curtis, Carey & Graham, Giles, 2019. "Conceptualizing freight generation for transport and land use planning: A review and synthesis of the literature," Transport Policy, Elsevier, vol. 74(C), pages 24-34.
    4. Ioannis BARAKLIANOS & Louafi BOUZOUINA & Patrick BONNEL, 2018. "The impact of accessibility on the location choices of the business services. Evidence from Lyon urban area," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 48, pages 85-104.
    5. Thomas, Trevor & Mondschein, Andrew & Osman, Taner & Taylor, Brian D., 2018. "Not so fast? Examining neighborhood-level effects of traffic congestion on job access," Transportation Research Part A: Policy and Practice, Elsevier, vol. 113(C), pages 529-541.
    6. Mondschein, Andrew & Taylor, Brian D., 2017. "Is traffic congestion overrated? Examining the highly variable effects of congestion on travel and accessibility," Journal of Transport Geography, Elsevier, vol. 64(C), pages 65-76.
    7. Selod,Harris & Soumahoro,Souleymane, 2020. "Big Data in Transportation : An Economics Perspective," Policy Research Working Paper Series 9308, The World Bank.
    8. Noureen Zafar & Irfan Ul Haq, 2020. "Traffic congestion prediction based on Estimated Time of Arrival," PLOS ONE, Public Library of Science, vol. 15(12), pages 1-19, December.
    9. Moya-Gómez, Borja & García-Palomares, Juan Carlos, 2017. "The impacts of congestion on automobile accessibility. What happens in large European cities?," Journal of Transport Geography, Elsevier, vol. 62(C), pages 148-159.
    10. Morgenroth, Edgar, 2014. "The Regional Development Impacts of Transport Infrastructure: A Literature Review and Policy Implications," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT278, June.
    11. Taylor, Brian & Osman, Taner & Thomas, Trevor & Mondschein, Andrew, 2016. "Not So Fast: A Study of Traffic Delays, Access, and Economic Activity in the San Francisco Bay Area," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt9qf2481r, Institute of Transportation Studies, UC Berkeley.

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