High-speed railway, industrial firm sorting, and electricity demand redistribution

Abstract

The opening of the high-speed railways (HSR) changes regional comparative advantage, leading to the sorting behavior of electricity-intensive industrial firms, which significantly impacts local electricity demand. This study evaluates the impact of HSR openings on electricity consumption and electricity consumption intensity in prefecture-level municipalities from 2005 to 2019. Utilizing a difference-in-differences (DID) model, our findings reveal that, on average, the opening of HSR results in a 5.4 % decline in overall electricity consumption and a 4.4 % reduction in electricity consumption intensity in municipalities connected to the HSR system. Our mechanism tests indicate that the introduction of HSR prompts the transfer of industries, primarily due to the sorting behavior of industrial firms responding to land price considerations. The main findings are also robust across a range of specifications. This paper offers the first compelling empirical insights regarding the impacts of HSR on electricity consumption and its intensity, providing crucial implications for understanding the spatial distribution of electricity demand.