Using a dynamic spatial difference-in-differences estimator to evaluate the effect of high speed rail and tourist transit service on tourism demand

Abstract

This study uses the Dynamic Spatial Difference-in-Differences model (Dynamic SDID) to analyze the impact of the Taiwan High-Speed Rail (THSR) on Taiwan’s tourism demand. To control for spillover effects, the model incorporates the Taiwan Tourist Shuttle service (TSHU) as an alternative transportation option, the interactive effects between TSHU and THSR, and the spatial autocorrelation between TSHU and THSR. The analysis results indicate that controlling for spillover effects is crucial for analyzing the impact of the High-Speed Rail and tourist transit service on Tourism Demand, and the Dynamic SDID is a better analytical model for this purpose. The THSR has a significant positive impact on tourism demand, while its spatial autocorrelation effect is significantly negative. This suggests that the increase in tourist traffic brought about by THSR mainly comes from existing tourists in the surrounding areas rather than generating new tourism demand. The TSHU, on the other hand, has a negative but insignificant impact on tourism demand, but its interaction with THSR has a significant positive effect, indicating that the two services complement each other. Therefore, to enhance Taiwan’s tourism demand, the focus should still be on improving the attractiveness of tourist destinations rather than solely relying on the construction of the High-Speed Rail. Additionally, while the TSHU does not contribute significantly to the development of specific individual tourist destinations, it does facilitate regional tourism development. Therefore, selecting TSHU routes based on actual market conditions can promote the growth of the tourism industry.