Transportation Access and Commercial Organization of Cities

Wharton Business Economics and Public Policy Department; Faculty Advisers: Todd Sinai, Benjamin Keys (Joseph Gyourko) 

I study how changes in a location’s accessibility influences where commercial establishments locate. Customers access brick-and-mortar establishments by traveling to them, either by driving or by public transit. Firms often co-locate with transit hubs, for example at the city center, or with each other along heavily foot-trafficked routes to ensure customers can access them.

However, with the rise in ride-sharing apps creating personalized public transit, many of the traditional benefits to co-locating in the most accessible areas of the city are no longer large enough to justify the high rents. I exploit Uber’s entry into local markets crossed with a location’s ex-ante travel accessibility to measure the impact an increase in accessibility has on the number and type of retail firms in a location.

Nationally, I find that the share of restaurant service firms locating in the center of the city falls by 2% post entry. Locally, I find that ex-ante high access zip codes lose bars and restaurants relative to their ex-ante low access neighbors at a rate that closes the gap in establishment count within 2 to 5 years post Uber entry. I develop a model allowing me to expand analysis to a suite of consumer industries, with agglomeration and dispersion varying on an industry’s customer taste uncertainty and its reliance on neighborhood demand.