Topic: Transportation Network and Market Integration: Evidence from China


Speaker: Li Shengyu, University of New South Wales


Time: September 24, 2024, 10:30

Venue: EMS 229

Abstract: This paper examines the impact of China's expressway expansion between 1998 and 2007 on market integration and firm performance within the manufacturing sector. The rapid expansion of the transportation network significantly enhanced market connectivity, improving firms' access to both input and output markets and intensifying competition. We explore how individual firms are influenced by these changes in terms of productivity, intermediate input prices, and market power by developing a new approach to estimate these measures at the firm level. Our findings reveal that the expansion of the transportation network significantly improved firm centrality, leading to enhanced market access and increased competition. Improved upstream market access reduced input prices and raised markups, while better downstream access boosted productivity. Although increased competition exerted countervailing pressures, the effects of market access dominated. In addition, lower-performing firms, particularly those with lower productivity, higher input prices, and lower markups, benefited more from the network improvement, and consequently leads to regional convergence.

Guest Bio: Li Shengyu received his PhD in Economics from Pennsylvania State University in 2014. Prior to joining the University of New South Wales in 2018, he was a Lecturer in Economics at Durham University, UK. Research interests focus on the intersection of industrial organization and international trade, with a particular focus on the heterogeneity of firms' productivity and input prices and their impact on trade participation, resource allocation and industry dynamics. The research agenda involves the use of microdata to estimate static or dynamic structural models of firms' decisions. Articles have appeared in RAND Journal of Economics, Economic Journal, Journal of International Economics, International Economic Review, European Economic Review, International Journal of Industrial Organization.