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Making a Market: Infrastructure, Integration, and the Rise of Innovation

Author

Listed:
  • David Andersson

    (Uppsala University and Linköping University)

  • Thor Berger

    (Research Institute of Industrial Economics and Lund University)

  • Erik Prawitz

    (Research Institute of Industrial Economics)

Abstract

We exploit exogenous variation arising from the historical rollout of the Swedish railroad network across municipalities to identify the impacts of improved transport infrastructure on innovative activity. A network connection led to a local surge in patenting due to an increased entry and productivity of inventors. As the railroad network expanded, inventors in connected areas began to develop ideas with applications outside the local economy, which were subsequently sold to firms along the network. Our findings suggest that reductions in communication and transportation costs were an important driver of the historical emergence of a market for ideas.

Suggested Citation

  • David Andersson & Thor Berger & Erik Prawitz, 2023. "Making a Market: Infrastructure, Integration, and the Rise of Innovation," The Review of Economics and Statistics, MIT Press, vol. 105(2), pages 258-274, March.
    • Handle: RePEc:tpr:restat:v:105:y:2023:i:2:p:258-274
    DOI: 10.1162/rest_a_01067
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    Cited by:

    1. Pauly, Stefan & Stipanicic, Fernando, 2021. "The creation and diffusion of knowledge: Evidence from the Jet Age," CEPREMAP Working Papers (Docweb) 2112, CEPREMAP.
    2. Chen, Jiahui & Shi, Jinchuan & Wang, Zheng & Zeng, Shirong & Zhou, Zhuo, 2025. "The power of wings: How air connections fuel cross-regional collaboration in China?," China Economic Review, Elsevier, vol. 92(C).
    3. Li, Lei & Liu, Bocong & Sheng, Bin & Wang, Tianyu, 2025. "“A tale of two rails”: Transportation infrastructure and technological spillovers from R&D center foreign firms," China Economic Review, Elsevier, vol. 90(C).
    4. Eric Melander, 2020. "Transportation Technology, Individual Mobility and Social Mobilisation," CAGE Online Working Paper Series 471, Competitive Advantage in the Global Economy (CAGE).
    5. Liu, Xiaoqian & Cifuentes-Faura, Javier & Yang, Xiaodong & Pan, Junyu, 2025. "The green innovation effect of industrial robot applications: Evidence from Chinese manufacturing companies," Technological Forecasting and Social Change, Elsevier, vol. 210(C).
    6. Lindgren, Erik & Pettersson-Lidbom, Per & Tyrefors, Björn, 2021. "The Causal Effect of Transport Infrastructure: Evidence from a New Historical Database," Working Paper Series 1407, Research Institute of Industrial Economics.
    7. Tian, Xiaohan & Lu, Haiyong, 2023. "Digital infrastructure and cross-regional collaborative innovation in enterprises," Finance Research Letters, Elsevier, vol. 58(PC).
    8. Gavresi, Despina & Litina, Anastasia & Tsiachtsiras, Georgios, 2025. "Motorways and railroads to trust," Journal of Economic Behavior & Organization, Elsevier, vol. 234(C).
    9. Berger, Thor & Prawitz, Erik, 2024. "Collaboration and connectivity: Historical evidence from patent records," Journal of Urban Economics, Elsevier, vol. 139(C).
    10. Berger, Thor, 2019. "Railroads and Rural Industrialization: evidence from a Historical Policy Experiment," Explorations in Economic History, Elsevier, vol. 74(C).
    11. Mao, Ning & Sun, Weizeng & Zhang, Liuqin, 2024. "The innovation effects of transportation infrastructure: Evidence from highways in China," Economics of Transportation, Elsevier, vol. 38(C).

    More about this item

    JEL classification:

    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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