Standing strong? The causal impact of metro stations on service firms’ survival

Abstract

The aim of the paper is to investigate the impact of the extension of a metro line on the survival of individual firms. An empirical analysis focuses on the relation between proximity to new stations and firm survival following the announcement of the extension of the orange line of the metro in Montréal (Canada) between 1996 and 2016. To do so, a Cox Proportional Hazards model is estimated using the simultaneous announcement of two potential extensions to define the treatment (new stations) and control groups (speculative stations) based on the distance to the closest stations. The model explicitly controls for anticipation and speculation effect by introducing three distinct treatment effects by period. The impact of the new metro stations appears to be mostly positive on firms’ survival probability during the construction period and after the opening of the service. The results suggest that the metro extension does have a positive influence on the survival rates of individual firms within 250 to 1,250 m. of the closest station, especially for local activities.