Is distance really dying? Transportation and knowledge spillovers

Abstract

Enhanced transportation infrastructure improves the frequency of travel and facilitates face-to-face communication. Will the resulting reduction in travel cost mitigate the geographical concentration of knowledge spillovers? Our empirical strategy exploits China's mass expansion of its intercity high-speed railway network as a natural experiment. Using patent citations as the proxy for knowledge spillovers, we find inventors increasingly rely on more distant knowledge after rail connection and newly connect cities' innovation performance improves substantially.