Peer effect in the construction of China’s high-speed rail stations: Empirical evidence from spatial econometric analysis

Abstract

The construction of China’s extensive high-speed rail (HSR) network is driven by various motives of different participants. This study employs an improved spatial econometric model to examine the motivation of local officials behind the construction of HSR stations. We employ a comprehensive dataset consisting of information about HSR station construction, the promotion of officials, the economic growth rate, etc., in 246 prefecture-level cities in China. The findings suggest that local officials are not making their decisions regarding HSR stations solely on conditions in their own cities. The construction of HSR stations is largely affected by the peer effect arising from geographic adjacency, economic adjacency and administrative adjacency. This is mainly because China’s local officials are engaged in the Promotion Tournament based on Yardstick Competition. Political promotion strengthens the peer effect. In addition, the fact that no directional learning between developed and underdeveloped cities reveals the severity of the peer effect in the construction of HSR stations. This paper has also offered several policy implications based on empirical analysis.