Cancelled: KCG Seminar on Consumption Impact of Uber on March 13, 2020

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Reduction in transportation costs is generally considered to be advantageous for fostering (cross-border) trade. It makes it easier for producers to overcome the challenge of geographic distance to source resources and acquire intermediate goods necessary for production from anywhere. It also eases the transportation of finished goods over long distances to potential consumers worldwide. Such positive trade impact of decreasing transportation costs seems to be, at first glance, strongly linked to traded goods and services that are deliverable from producers to customers.

A recent research project of Prof. Jordan James Norris, Ph.D. (Aarthus University) that analyses consumption microdata and links it to the entry of Uber across US cities shows, however, that services sectors which require consumption on site can also benefit from the reduction in transportation costs. To share his recent findings with interested scholars Norris will give a KCG Lunch-Time Seminar titled “Ride-Sharing and the Geography of Consumption Industries” this Friday at the Kiel Institute for the World Economy.

Abstract: Exploiting sharp geographic and temporal variation in the entry of Uber across US cities, we find that ride-sharing availability causes a significant increase in sales, employment, and entry primarily in two industries: gyms and sports centres (NAICS 713), and restaurants and bars (NAICS 722). Using consumption microdata, we show this is driven by a demand-side response to a reduction in transportation costs caused by Uber: millennial consumers substitute from home to away-from-home consumption of food, alcohol and fitness. Ride-sharing attenuates spatial frictions, reducing the relative economic price of away-from-home consumption. These effects are polarized between core and peripheral neighbourhoods, yet opposite for each industry: Uber causes greater agglomeration in 713, but dispersion in 722. We show this is theoretically consistent with demand substitution across products within 713 being greater than within 722: agglomeration forces are maximal at lower transportation costs when substitutability is higher. We provide empirical evidence supporting this demand heterogeneity by verifying theoretical implications on the distance travelled for consumption and the extent of initial agglomeration.

The Seminar will take place on March 13, 2020 (12:00 – 13:00) in the Medienraum at the Kiel Institute (Kiellinie 66, 24105 Kiel, Germany).