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

Author

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  • 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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    More about this item

    Keywords

    Road tolls; Infrastructure; Firm performance; Firm behavior; Location; Portugal;
    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)

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