Small firms dominated the American economy in the nineteenth century, and they still dominate in many developing economies today. This paper tests whether geographic market segmentation due to underdeveloped intracity transportation technology precludes the emergence of large retail/wholesale stores. I exploit the natural experiment of Boston's rapid electrification from its previous horse-drawn streetcar system, which occurred between 1889 and 1896. Analyzing newly digitized data, I find that rail-connected locations experienced a sharp decline in the share of sole proprietorships among food retail/wholesale establishments after the electrification relative to off-rail locations. Changes in market access due to streetcar electrification can explain this effect.
"The Economics of Speed: The Electrification of the Streetcar System and the Decline of Mom-and-Pop Stores in Boston, 1885–1905."
American Economic Journal: Applied Economics,
Firm Performance: Size, Diversification, and Scope
Retail and Wholesale Trade; e-Commerce
Railroads and Other Surface Transportation
Economic History: Transport, Trade, Energy, Technology, and Other Services: U.S.; Canada: Pre-1913
Regional and Urban History: U.S.; Canada: Pre-1913
Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise