Road to integration? Unraveling the impact of high-speed rail expansion on cross-city government procurement in China

This study explores the potential of transport networks in promoting inter-jurisdictional market integration. Utilizing over 3 million public procurement contracts, we assess the impact of China’s recent high-speed rail (HSR) expansion on the flow of government contracts across cities. HSR connections significantly increased cross-city procurement within provinces but had negligible impact on cross-province dyads. With data on both accepted and rejected bidders, we find that while out-of-province firms increased bid participation, their winning probabilities decreased after HSR connections. Our results suggest that administrative borders undermine the positive impact of transportation infrastructure on domestic market integration.