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Does high-speed rail stimulate innovation: City- and firm-level evidence from China

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  • Zhou, Zhengyi
  • Zhang, Anming

Abstract

This paper studies the effect of transportation infrastructure on innovation. Leveraging China’s development of high-speed rail (HSR) network, we adopt an instrumental variable approach and find that HSR increases city-level innovation. This is driven by big firms, whose R&D investment, patent ownership likelihood, and total patent citations increase after HSR’s opening in their headquarters cities. To demonstrate the underlying mechanisms, we develop an oligopolistic competition model wherein a dominant big firm can drive technology progress and market demand through R&D investments, while a small firm free-rides. HSR exposes the big firm to greater competition pressure while simultaneously improving its R&D efficiency. This encourages the big firm to boost demand through innovation. The model’s predictions are empirically supported.

Suggested Citation

  • Zhou, Zhengyi & Zhang, Anming, 2026. "Does high-speed rail stimulate innovation: City- and firm-level evidence from China," Transportation Research Part A: Policy and Practice, Elsevier, vol. 205(C).
    • Handle: RePEc:eee:transa:v:205:y:2026:i:c:s0965856426000029
    DOI: 10.1016/j.tra.2026.104861
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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