Travel costs, trade, and market segmentation: Evidence from China's high-speed railway

Using high-speed railway construction as a natural experiment, this paper contributes to our understanding of how passenger-oriented transportation infrastructure affects inter-regional trade. The findings show that trade value increases and market segmentation decreases with high-speed railway (HSR) expansion, indicating that movement of people fosters movement of freight. The heterogeneous analyses suggest that technology-intensive industries and provinces with poorer pre-existing ICT level are impacted more. The impact is driven by a substitution effect between HSR and conventional railways in passenger transportation service, and by accelerated information exchange and knowledge spillover.