2018 Volume 74 Issue 5 Pages I_483-I_491
Investments in transportation infrastructure such as high-speed railway and highways not only reduce transportation costs between transaction partners but also promote the efficiency of production networks of firms. This study investigates how the inter-firm transaction network changes, which might be triggered by transportation investment, affect the performance of firms. Regarding the whole line opening of Kyushu Shinkansen in 2011 as an external shock, we use the difference in difference propensity score matching (DID-PSM) method to estimate the effect of the increase in the number of transactions with suppliers on the productivity of firms. Results show that improvement of transportation networks tends to enhance the density of the inter-firm transaction networks. Furthermore, we find that the increase in the number of suppliers raises firm-level productivity directly and beyond the effect of effective density in the short-run.
