Transportation, decentralization, and path dependence: How did the old tramway shape Shanghai, China?

Abstract

This article studies the short- and long-run economic consequences of the now-extinct Shanghai tramway. Tramway was the primary mode of transportation in Shanghai between 1908 and the 1930s, continuing to operate until 1975. With the geolocation of the tramway lines on both historical cadastral maps and current Google maps, the article finds that after the arrival of the tramway, land lots close to the tramway lines experienced a larger increase in land value relative to those far away from the tramway lines, and that the reduction in transportation costs led to a flattening land value gradient with respect to distance from the central business district (CBD). It also finds that the tramway still influences the current pattern of urban land value, even nearly fifty years after the removal of the last tramway track. Such persistent influence can be largely explained by the follow-on amenities near the tramway lines. The evidence found in this article suggests that the tramway in Shanghai promoted decentralization by enhancing accessibility to the CBD from distant locations in its heyday, and influences modern behaviors through the mutually reinforced private and public coordination of economic activities.