IDEAS home Printed from https://ideas.repec.org/a/oup/jecgeo/v20y2020i6p1331-1357..html
   My bibliography  Save this article

The effects of highway tolls on private business activity—results from a natural experiment
[Is public expenditure productive?]

Author

Listed:
  • David B Audretsch
  • Dirk Christian Dohse
  • João Pereira dos Santos

Abstract

The article studies the impact of a switch from free to charged highway provision on firm numbers and private sector employment in a panel of Portuguese municipalities covering the period 2007–2013. It exploits the fact that tolls on certain highways in Portugal were unexpectedly introduced in reaction to the sovereign debt crisis to establish causality. Findings suggest that the price of highway tolls in terms of forgone employment and firm formation may be substantial. Comprehensive analyses of effect heterogeneity reveal that the effects differ across municipalities, sectors and firm size classes. The negative effects of highway tolls are strongest in the municipalities traversed by the newly tolled highways and seem to decrease with distance from these highways, whereas distance to Lisbon aggravates the negative effects of the tolls. We also find that larger firms and manufacturing firms are more strongly affected by the tolls than smaller firms and firms in the service sector and that the negative effect on firm numbers is strongest immediately after the introduction of the tolls, whereas the negative effect on employment increases with the duration of the treatment.

Suggested Citation

  • David B Audretsch & Dirk Christian Dohse & João Pereira dos Santos, 2020. "The effects of highway tolls on private business activity—results from a natural experiment [Is public expenditure productive?]," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1331-1357.
    • Handle: RePEc:oup:jecgeo:v:20:y:2020:i:6:p:1331-1357.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/jeg/lbaa003
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dave Donaldson, 2018. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," American Economic Review, American Economic Association, vol. 108(4-5), pages 899-934, April.
    2. R. E. Caves & M. E. Porter, 1977. "From Entry Barriers to Mobility Barriers: Conjectural Decisions and Contrived Deterrence to New Competition," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 91(2), pages 241-261.
    3. Bleakley, Hoyt & Lin, Jeffrey, 2012. "Thick-market effects and churning in the labor market: Evidence from US cities," Journal of Urban Economics, Elsevier, vol. 72(2), pages 87-103.
    4. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
    5. Oliver Falck & Robert Gold & Stephan Heblich, 2017. "Lifting the iron curtain: school-age education and entrepreneurial intentions," Journal of Economic Geography, Oxford University Press, vol. 17(5), pages 1111-1148.
    6. Gilles Duranton & Matthew A. Turner, 2011. "The Fundamental Law of Road Congestion: Evidence from US Cities," American Economic Review, American Economic Association, vol. 101(6), pages 2616-2652, October.
    7. Gilles Duranton & Matthew A. Turner, 2012. "Urban Growth and Transportation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(4), pages 1407-1440.
    8. Gilles Duranton & Peter M. Morrow & Matthew A. Turner, 2014. "Roads and Trade: Evidence from the US," Review of Economic Studies, Oxford University Press, vol. 81(2), pages 681-724.
    9. Nathaniel Baum-Snow & Loren Brandt & J. Vernon Henderson & Matthew A. Turner & Qinghua Zhang, 2017. "Roads, Railroads, and Decentralization of Chinese Cities," The Review of Economics and Statistics, MIT Press, vol. 99(3), pages 435-448, July.
    10. Benjamin Faber, 2014. "Trade Integration, Market Size, and Industrialization: Evidence from China's National Trunk Highway System," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(3), pages 1046-1070.
    11. Banerjee, Abhijit & Duflo, Esther & Qian, Nancy, 2020. "On the road: Access to transportation infrastructure and economic growth in China," Journal of Development Economics, Elsevier, vol. 145(C).
    12. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    13. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    14. Austrian Institute of Economic Research, 2006. "Competitiveness Report 2006," WIFO Studies, WIFO, number 28814, February.
    15. Datta, Saugato, 2012. "The impact of improved highways on Indian firms," Journal of Development Economics, Elsevier, vol. 99(1), pages 46-57.
    16. Nathaniel Baum-Snow, 2007. "Did Highways Cause Suburbanization?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 122(2), pages 775-805.
    17. Berger, Thor & Enflo, Kerstin, 2017. "Locomotives of local growth: The short- and long-term impact of railroads in Sweden," Journal of Urban Economics, Elsevier, vol. 98(C), pages 124-138.
    18. Catherine Armington & Zoltan J. Acs, 2008. "The Determinants of Regional Variation in New Firm Formation," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 18, pages 224-243, Edward Elgar Publishing.
    19. Dirk Dohse, 1998. "Infrastructure Provision And Locational Efficiency In A Federation: A Numerical Approach," Papers in Regional Science, Wiley Blackwell, vol. 77(3), pages 241-263, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fang, Da & Guo, Yan, 2022. "Flow of goods to the shock of COVID-19 and toll-free highway policy: Evidence from logistics data in China," Research in Transportation Economics, Elsevier, vol. 93(C).
    2. Rocha, Bruno T. & Afonso, Nuno & Melo, Patrícia C. & de Abreu e Silva, João, 2022. "What drives the allocation of motorways? Evidence from Portugal's fast-expanding network," Journal of Transport Geography, Elsevier, vol. 102(C).
    3. Romano, Patrícia Ribeiro & Bezerra Sampaio, Raquel Menezes, 2023. "Road concessions: Evidence of the effects of improving the transport infrastructure on economic development in Brazil," Transport Policy, Elsevier, vol. 142(C), pages 115-124.
    4. Catarina Branco & Dirk C. Dohse & João Pereira Santos & José Tavares, 2022. "The impact of a rise in transportation costs on firm performance and behaviour," GEE Papers 0167, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Sep 2022.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. David B Audretsch & Dirk Christian Dohse & João Pereira dos Santos, 0. "The effects of highway tolls on private business activity—results from a natural experiment," Journal of Economic Geography, Oxford University Press, vol. 20(6), pages 1331-1357.
    2. Branco, Catarina & Dohse, Dirk & dos Santos, João Pereira & Tavares, José, 2022. "Nobody's gonna slow me down? The effects of a transportation cost shock on firm performance and behavior," Ruhr Economic Papers 949, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Audretsch, David B. & Dohse, Dirk & dos Santos, João Pereira, 2017. "Do toll-free highways foster firm formation and employment growth? Results from a quasi-natural experiment," Kiel Working Papers 2080, Kiel Institute for the World Economy (IfW Kiel).
    4. Catarina Branco & Dirk C. Dohse & João Pereira Santos & José Tavares, 2022. "The impact of a rise in transportation costs on firm performance and behaviour," GEE Papers 0167, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Sep 2022.
    5. Ciani, Emanuele & de Blasio, Guido & Poy, Samuele, 2022. "A freeway to prosperity? Evidence from Calabria, South of Italy," Economics of Transportation, Elsevier, vol. 29(C).
    6. Branco, Catarina & Dohse, Dirk C. & Pereira dos Santos, João & Tavares, José, 2023. "Nobody’s gonna slow me down? The effects of a transportation cost shock on firm performance and behavior," Open Access Publications from Kiel Institute for the World Economy 273314, Kiel Institute for the World Economy (IfW Kiel).
    7. He, Guojun & Xie, Yang & Zhang, Bing, 2020. "Expressways, GDP, and the environment: The case of China," Journal of Development Economics, Elsevier, vol. 145(C).
    8. Hanlon, W.Walker & Heblich, Stephan, 2022. "History and urban economics," Regional Science and Urban Economics, Elsevier, vol. 94(C).
    9. Stef Proost & Jacques-François Thisse, 2019. "What Can Be Learned from Spatial Economics?," Journal of Economic Literature, American Economic Association, vol. 57(3), pages 575-643, September.
    10. Hanley, Douglas & Li, Jiancheng & Wu, Mingqin, 2022. "High-speed railways and collaborative innovation," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    11. Luisa Dörr & Stefanie Gäbler, 2020. "Does Highway Accessibility Influence Local Tax Factors? Evidence from German Municipalities," ifo Working Paper Series 321, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    12. Liaoliao Duan & Dongxiao Niu & Weizeng Sun & Siqi Zheng, 2021. "Transportation infrastructure and capital mobility: evidence from China’s high-speed railways," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 67(3), pages 617-648, December.
    13. Baek, Jisun & Park, WooRam, 2022. "The impact of improved passenger transport system on manufacturing plant productivity," Regional Science and Urban Economics, Elsevier, vol. 96(C).
    14. Bird, Julia & Straub, Stéphane, 2020. "The Brasília experiment: The heterogeneous impact of road access on spatial development in Brazil," World Development, Elsevier, vol. 127(C).
    15. Yoshifumi Konishi & Akari Ono, 2024. "Do Winners Win More from Transport Megaprojects? Evidence from the Great Seto Bridges in Japan," Keio-IES Discussion Paper Series 2024-003, Institute for Economics Studies, Keio University.
    16. Hayakawa, Kazunobu & Keola, Souknilanh & Sudsawasd, Sasatra & Yamanouchi, Kenta, 2022. "Impacts of an international bridge on households: Evidence from Thailand," Journal of Asian Economics, Elsevier, vol. 83(C).
    17. Gibbons, Stephen & Lyytikäinen, Teemu & Overman, Henry G. & Sanchis-Guarner, Rosa, 2019. "New road infrastructure: The effects on firms," Journal of Urban Economics, Elsevier, vol. 110(C), pages 35-50.
    18. Santamaria, Marta, 2020. "Reshaping Infrastructure: Evidence from the division of Germany," The Warwick Economics Research Paper Series (TWERPS) 1244, University of Warwick, Department of Economics.
    19. Stephan Fretz & Raphaël Parchet & Frédéric Robert-Nicoud, 2022. "Highways, Market Access and Spatial Sorting," The Economic Journal, Royal Economic Society, vol. 132(643), pages 1011-1036.
    20. Talebian, Ahmadreza & Zou, Bo & Hansen, Mark, 2018. "Assessing the impacts of state-supported rail services on local population and employment: A California case study," Transport Policy, Elsevier, vol. 63(C), pages 108-121.

    More about this item

    Keywords

    Infrastructure provision; highway tolls; regional economic development; natural experiment;
    All these keywords.

    JEL classification:

    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:jecgeo:v:20:y:2020:i:6:p:1331-1357.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/joeg .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.