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Nobody’s gonna slow me down? The effects of a transportation cost shock on firm performance and behavior

Author

Listed:
  • Branco, Catarina
  • Dohse, Dirk C.
  • Pereira dos Santos, João
  • Tavares, José

Abstract

We study the firm-level responses to a substantial increase in transportation costs in the wake of a quasi-experiment that introduced tolls in a subset of Portuguese highways. Exploiting a unique dataset encompassing the universe of Portuguese private firms, we find that the introduction of tolls caused a substantial decrease in turnover (−10.2%) and productivity (−4.3%) in treated firms vis-à-vis firms in the comparison group. In response to the tolls, firms substantially cut employment-related expenses and purchases of other inputs. Labor costs were reduced by both employment cuts and a decrease in average wages. While firms did not increase inventory, there is some evidence for increased firm exit, in particular by firms in tradables sectors.

Suggested Citation

  • 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," Journal of Urban Economics, Elsevier, vol. 136(C).
    • Handle: RePEc:eee:juecon:v:136:y:2023:i:c:s0094119023000384
    DOI: 10.1016/j.jue.2023.103569
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    Cited by:

    1. Mauricio S. de Carvalho & Patrícia C. Melo & Bruno T. Rocha & Isabel Proença & João de Abreu e Silva, 2025. "Market potential, road accessibility, and firm births: evidence from twenty years of road investment," Working Papers REM 2025/0364, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    2. Ren, Shenggang & Bao, Ruizhi & Gao, Zhengye, 2025. "Arrival of distant power: The impact of ultra-high voltage transmission projects on energy structure in China," Energy, Elsevier, vol. 316(C).
    3. Zhong, Ninghua & Cai, Dongmei & Lian, Fangzhou & Yan, Shengyu, 2024. "Highway usage efficiency and debt burden: Evidence from China," Journal of Asian Economics, Elsevier, vol. 91(C).
    4. Qi, Qingyu & Uchida, Konari & Zhang, Yuyang, 2025. "Does convenient transportation add value to acquisition targets? Evidence from Chinese M&As," Pacific-Basin Finance Journal, Elsevier, vol. 94(C).
    5. Dirk Dohse & Rajeev K. Goel & James W. Saunoris, 2024. "Supply chain constraints and research spending: an international investigation," The Journal of Technology Transfer, Springer, vol. 49(4), pages 1369-1386, August.
    6. Martins, Ana & Pereira dos Santos, João & Pozzobon, Fernando, 2025. "Sailing Through Troubled Waters: Evidence from Support Discontinuities to Firms in Times of Crisis," IZA Discussion Papers 18136, IZA Network @ LISER.
    7. Ana Martins & João Pereira dos Santos & Fernando Pozzobon, 2025. "Sailing through Troubled Waters: Evidence from the APOIAR Program," GEE Papers 190, Gabinete de Estratégia e Estudos, Ministério da Economia, revised May 2025.
    8. TANAKA,Kiyoyasu, 2024. "From Walking to Driving: Economic Impact of Mountain Roads," IDE Discussion Papers 949, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    9. José Mesquita & João Pereira dos Santos & José Tavares, 2025. "European funds and firm performance: evidence from a natural experiment," Small Business Economics, Springer, vol. 65(4), pages 2143-2178, December.
    10. Nandwani, Bharti & Roychowdhury, Punarjit & Shankar, Binay, 2025. "Rural Roads and Firm Outcomes in India," GLO Discussion Paper Series 1650, Global Labor Organization (GLO).
    11. Boulton, Thomas J. & Ellram, Lisa M., 2024. "The intersection of supply chain operations and finance: Logistics uncertainty and International IPO underpricing," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 189(C).

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    Keywords

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    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)

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