The Economics of Speed: The Electrification of the Streetcar System and the Decline of Mom-and-Pop Stores in Boston, 1885-1905

65 Pages Posted: 16 Jul 2020

Date Written: April 28, 2020

Abstract

Small firms dominated the American economy in the nineteenth century, and still dominate in many developing economies today. This paper tests whether geographic market segmentation due to underdeveloped intracity transportation technology precludes the emergence of large retail/wholesale stores. I exploit the natural experiment of Boston's rapid electrification from its previous horse-drawn streetcar system, which occurred between 1889 and 1896. Analyzing newly digitized data, I and that rail-connected locations experienced a sharp decline in the share of sole proprietorships among food retail/wholesale establishments after the electrification relative to off-rail locations. Changes in market access due to streetcar electrification can explain this effect.

Keywords: Small Business, Transportation Infrastructure, Market Access

JEL Classification: N71, N81, R00

Suggested Citation

You, Wei, The Economics of Speed: The Electrification of the Streetcar System and the Decline of Mom-and-Pop Stores in Boston, 1885-1905 (April 28, 2020). Available at SSRN: https://ssrn.com/abstract=3634738 or http://dx.doi.org/10.2139/ssrn.3634738

Wei You (Contact Author)

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

HOME PAGE: http://https://sites.google.com/site/youweilucky/

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