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

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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.
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    File URL: http://hdl.handle.net/10.1093/jeg/lbaa003
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    Cited by:

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    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.

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    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)

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