Investigating the Effect of Highway Infrastructure Creation on Market Integration

Undergraduate Honors Thesis

Citations

Citeable URL: https://scholar.colorado.edu/concern/undergraduate_honors_theses/dr26xz860

Abstract

The Interstate Highway System (IHS) is an integral aspect of modern-day transportation. The System changed the landscape of transportation in the United States by decreasing travel times dramatically and providing reliable roads that are now used by individuals and firms alike. This thesis seeks to answer the following question: What is the effect of highway infrastructure creation on market integration? The effect of the highway system is captured through county pair travel times between 1940 and 1992. Indicators used to measure market integration include pecuniary variables (differences in total farmland value and value per acre between counties) and non-pecuniary (differences in average farm sizes and the number of farms between counties) variables. Using linear models (fixed effects and interactions) and quadratic models, I analyze the effects of travel time on my various indicators for market integration. The analysis finds that increases in travel time led to slower decreases in market integration measured by pecuniary indicators and quicker decreases in market integration measured by non-pecuniary indicators. Furthermore, changes from the IHS exhibit diminishing returns, and the effect of travel time depends on whether counties specialized in the same crops before construction of the IHS began.

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