High-speed rail, market access, and the rise of consumer cities: Evidence from China

This study examines the impact of high-speed rail (HSR) on the formation of consumer cities in China. We employ the market access (MA) approach and construct the least-cost path spanning tree network as an instrument to estimate the causal impact of HSR development on the socio-economic changes of counties from 2007 to 2016. Through a set of instrumental variable re-gressions, we find that districts with high MA growth experienced service sector agglomeration, manufacturing sector decentralization, and land price appreciation. These effects are relatively large for the urban districts of first-and second-tier Chinese cities. Through counterfactual analysis, we find that the absence of an HSR network decreases the growth of the number of service firms and service land price by 6.11% and 52.2%, respectively. These results suggest that HSR plays a key role in the rise of consumer cities by improving market access/integration, which transfers the economic structure from production to consumption.