Innovation in the Transport Sector Literature Review

Innovation in the Transport Sector Literature Review ORDER NOW FOR CUSTOMIZED AND ORIGINAL ESSAY PAPERS ON Innovation in the Transport Sector Literature Review The topic is Innovation in the transport sector. Innovation in the Transport Sector Literature Review Thesis: Student has a thesis statement about what is ‘true’ based on the two assigned papers. (2 points) Discussion of Research papers: There is analysis of both assigned papers (1 point) The discussion of the papers is meaningful to the advancement of the thesis (1 point) There is critical analysis of the papers (1 point) Writing style: There are no grammatical errors, incomplete sentences, or misspellings (1 point) The paper flows from one topic to the next and is logical (1 point) Page Minimum Minus one point for every page short of 5 pages (1 point) This exercise is designed to help you critically analyze research papers in economic history. You will use these critical analysis skills in writing your literature review. Each writing assignment must be 5 pages (doubled-spaced, 12-inch font, one inch margins). You do not need to paste graphs and tables in your paper, save space for your ideas. _s2.0_s0014498318300263_am.pdf background_the_early_transport_revolution_bogart_bogart_lefor_satchell.pptx britishturnpiketrusts.pdf Version of Record: https://www.sciencedirect.com/science/article/pii/S0014498318300263 Manuscript_806fb8843f517215c3f4f1c50e8286f0 Canal carriers and creative destruction in English transport Dan Bogart1, Michael Lefors2, and A.E.M. Satchell3 August 2018 Abstract Canals played a key role in the industrial revolution by creating the infrastructure for inland waterway transport. Public carriers responded to canals and the growing demand for transport by innovating in service speed, quality, and reliability. How did their innovations affect the transport market, especially road carriers? One hypothesis is that road and canal carriers complemented one another, offering services with different speeds and prices. Another sees them as competitors with canal carriers winning based on their lower operating costs. We test these hypotheses using London trade directories, which detail road and waterway services from London to most towns and cities from 1779 to 1827. Our main results show that introducing the standard canal barge service between London and a major city had no effect on the number of road carrier services supplied to that same city-pair. By contrast, introducing an express canal service, known as the fly boat, significantly reduced road carrier services supplied. Fly boats are found to have weaker competition effects if the ratio of waterway to road distance was greater and on short and long route distances. The results provide new insights on the importance of speed and service innovation during the industrial revolution. Key words: Canals, new goods, creative destruction, industrial revolution JEL codes: N7, R4, L9 1 Associate professor, department of economics UC Irvine, [email protected], Corresponding author. Economist, Ashenfelter & Ashmore, [email protected] 3 Research associate, department of Geography Cambridge University, [email protected] Data for this paper was created thanks to grants from the Leverhulme Trust (RPG-2013-093), Transport and Urbanization c.1670-1911 and NSF (SES-1260699), Modelling the Transport Revolution and the Industrial Revolution in England. We thank Jason Gravel for valuable research assistance. Special thanks also go to Alan Rosevear, Kara Dimitruk, and three anonymous reviewers for providing valuable comments. We also thank seminar participants at Caltech and UC Irvine for valuable feedback. 2 0 © 2018 published by Elsevier. This manuscript is made available under the Elsevier user license https://www.elsevier.com/open-access/userlicense/1.0/ 1. Introduction Canals are one of the leading technological and infrastructural innovations in the English economy during the industrial revolution. Canals involved innovations in engineering, including the design of basins, locks, and incline planes, and innovations in finance, including the application of joint stock companies to infrastructure.4 But this perspective ignores the services of public carriers. These firms offered regularly scheduled canal boat services and made innovations in speed, security, and reliability. The literature suggests some public carriers were seeking advantage over competitors, much like the process of ‘creative destruction’ described by Schumpeter.5 For example, Turnbull (1972) describes the new express services offered by the famous carrier Pickfords, who operated in the competitive market for long distance transport. How did the innovations by canal carriers affect the English transport market, including road carrier services? The answer to this question is not clear. In considering the broader impact of transport improvements Fogel (1979, p. 49) noted that it is “a misleading oversimplification to identify wagons, waterways and railroads with a sequence of temporal stages in which each was predominant…The transportation system that evolved during the nineteenth century embraced all three modes.”6 Some scholars studying British transport have argued along these lines that road and canal carriers operated in different complementary markets. Innovation in the Transport Sector Literature Review Canal carriers offered low costs and served customers with heavy-weight, low-value goods. Road carriers offered higher speed, security, and reliability and served customers with light-weight, high-value goods. An alternative view argues that road carriers had higher costs and were displaced by canal carriers when they 4 See Turnbull (1987) and Bagwell (2002) for discussion of canals as a key supply side change. Schumpeter (1975, pp. 82-85) described creative destruction as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” See Aghion and Howitt (1992) and Grossman and Helpman (1993) for recent works. 6 I thank an anonymous referee for recommending this passage from Fogel. 5 1 came into direct competition. In the literature, there are arguments favoring both views and thus the overall strength of complementarity or competition is ambiguous.7 In this paper, we use five London trade directories between 1779 and 1827 to shed new light on the impact of canal carriers on the transport market. London trade directories identify all carriers providing road and waterway services from London to other towns. Three types of waterway services were listed: (1) vessels, (2) barges, and (3) fly boats. Vessels refer to coastal sailing vessels and came in various types. Barges resembled vessels but were drawn by horses along a tow path. Fly boats were also drawn by horses, but they increased speed by operating relays and hauling on Sundays and at night. Fly boats also had more reliable crews. The three main types of road carrier services were: (1) wagons, (2) fly wagons, and (3) vans. Wagons usually carried 4 tons and were drawn by 4 to 6 horses. Fly wagons and vans were lighter and faster than wagons. We document the trends in waterway services from London to 53 major English cities with a population greater than 2500 in 1750. Vessels were common for most of these cities by 1779 and remained so up to 1827. Barge services became more common after 1800 and fly boats became more common after 1810. Additional evidence shows that fly boats generally charged 50 to 100% higher freight rates than barges, but fly boat speeds were 75 to 100% higher than barges. Furthermore, fly boats tended to ship merchandise and barges tended to ship raw materials. Fly boats also reached comparable speeds to wagons and at lower freight rates. With respect to road carriers, we follow an established literature counting weekly services between London and cities.8 Our figures confirm that road carrier services continued to grow in 7 8 See Turnbull (1972, 1987), Freeman (1980a, b), and Maw (2009, 2013). More references are below. See Chartres (1977), Freeman (1977), Gerhold (1986, 2014), Turnbull (1977), and Bogart (2005b). 2 the aggregate, even as canals spread through England. Moreover, speedy fly wagon and van services account for an increasing share of road carrier services after 1800. The directory data are especially useful for testing the competition and complementarity hypotheses. We create a variable for the number of weekly road carrier services from London to each major city and indicators for availability of vessel, barge, and fly boat services over several years. In the main specification, we estimate how road services for a London-city pair changed once each waterway service was introduced in that same city-pair. The model includes destination city and year fixed-effects following the generalized difference-in-differences model. The analysis is guided by the following theoretical framework. Each town-pair represents a transport market, which is being supplied by road carriers or vessels or both prior to canals. If cost efficiency was the most important consideration for existing road-users, then the introduction of barges in a market should reduce the number of road carrier services supplied because barges were lower cost. But if speed and reliability were more important for existing road-users, and if road carriers were better on these dimensions, then introducing barges should not affect the number of road carrier services supplied. In this case, barges created a complementary new service. By the same logic, the introduction of fly boats could reduce the number of road carrier services supplied if speed and reliability were most important for existing road users and if fly boats offered comparable speed to wagons, but at a lower cost. The regressions using London directories show that the introduction of barges did not significantly reduce road carrier services in a market. But the regressions also show that the introduction of fly boat services significantly reduced the number of road carrier services. These findings suggest that barges and road carrier services were complementary, but fly boats were strong competitors to road carriers in the transport market connecting London with major cities. 3 These conclusions are supported by checks on the model specification. One check introduces leads of barge and fly boat variables to test for ‘pre-treatment’ effects. Innovation in the Transport Sector Literature Review Another uses passenger coach services as a placebo. We also test for heterogeneity in the competition effect. Fly boats are found to have a weaker competition effect if the ratio of waterway to road distance was greater and if the route was short or long distance. These results are notable because there is a debate on whether competition depended on distance and other route characteristics.9 In summary, we think of initial canal development as an effort to provide services to traders in heavy goods, which were prohibitively expensive by road. Traders in light goods were served by roads and operated in different, complementary markets. Once canal infrastructure was in place, entrepreneurial canal carriers developed express services, like fly boats, which became substitutes for traditional road services. Our analysis extends the historical transportation literature in new directions. There is a growing literature on pre-railway transport improvements. Much of the focus is on productivity gains associated with new technology and infrastructure improvements.10 Studies of service providers are relatively rare in the literature.11 We contribute by documenting quality improvements made by public carriers and through analysis of competition and complementarity. Our findings link this case to the literature on creative destruction. Many of the canonical examples come from transport. For example, Schumpeter observed that “competition between the Pennsylvania and New York Central Railroads…might be sporadic and even trifling, but the competition to railroads provided by new transportation media such as trucks, automobiles, and 9 Turnbull (1987) has made the strongest claims concerning distance. This debate will be discussed more below. For examples on infrastructure see Bogart (2005b) and on technology Solar and Hens (2015), Ronnback (2012). 11 Gerhold (1988, 1996, 2014) are exceptions. 10 4 airplanes really mattered.”12 We add a new case to the creative destruction literature by showing that fly boats—not barges—displaced road services. Finally, our findings suggest that canal barge services provided a new transportation service for heavy goods. In the conclusion, we discuss future directions for studying the social savings of canals and new technologies during the industrial revolution.13 2. Background on transport modes At the beginning of the canal era c.1760, coastal transport was the largest mode by tonnage. The biggest market was the northeastern coal trade (Armstrong, 2009). River trade in corn, iron, and agricultural products was also large, particularly along the Thames, Severn, and Trent (Willan, 1964). Long-distance land transport was another important market (Pawson, 1977; Gerhold, 1988). Goods were shipped from London to large cities and back. London shipped mainly imported goods like sugar and calicoes, but also received a diversity of goods from the manufacturing regions. Often, goods would be forwarded from major cities to smaller towns along roads, which we interpret as ‘spokes’ in a hub and spoke network. Canals belonged to the system of inland waterways, which included tidal rivers and river navigations. Canals were different because they included long stretches of artificial waterway, where river navigations involved ‘cuts,’ which bypassed difficult sections of waterway. The Bridgewater is thought to be the first canal. The aim of its financier, the Duke of Bridgewater, was to connect Manchester with his coal mines at Worsley. The Bridgewater was a financial success and many more canal companies were proposed in parliamentary bills from the 1770s to the mid-1820s. The approval process was difficult, however, as many canals were opposed by 12 This passage was quoted in Stigler (2003, p. 101). See Fogel (1964), Fishlow (1965), and Hawke (1970) for classic works on social savings and Leunig (2005) and Herranz-Loncán (2006) for recent studies. See Berg and Hudson (1992), Crafts (2004), Mokyr (2009), Leunig and Voth (2011) for debates on the industrial revolution and welfare impacts of technologies. 13 5 landed interests and existing canal companies. Financing was also a challenge because largescale infrastructure finance was new. Most promoters and investors participated because of their local trade interests (Ward 1974). Innovation in the Transport Sector Literature Review Despite their local focus, canal companies collectively formed a national network. The waterway network in 1770, and its expansion from 1770 to 1830, are shown in figure 1.14 The two north-south routes to London are of most importance to this paper. The first via the Oxford Canal was opened in 1790. It was tortuously long and had more than 150 locks. It was also controlled by seven different canal companies.15 In 1805, a second north-south route to London opened with the completion of the Grand Junction Canal. Its more direct connection with London shortened the distance by 60 miles for cities like Manchester. The other long-distance routes of importance to London were the connections with Bristol and Gloucester in the southwest. 14 15 See Satchell (2017) for details on mapping the navigable waterways of England and Wales. The canal is described in a House of Lords Report, Sunday Trading on Canals (p. 44, 85). 6 Figure 1: The inland watery network of England and Wales from 1771 to 1830 Source: Satchell (2017). 2.1 Canal carriers 7 There is a large literature explaining the development and financing of canals.16 This article focuses on the carrier services by canal. Some of the early canal companies provided their own carrier services. The users of the Bridgewater canal, for example, mainly used Bridgewater boats. But after the first generation of canals it was more common for independent carriers to use their own boats in exchange for paying tolls.17 In this respect, roads and canals were similar in England. Road and waterway networks both required Acts of Parliament for investment. Parliament did not allow the trustees who managed turnpike roads to provide wagon services.18 By 1800, there were two main types of independent canal carriers, public and private. Private carriers might work for a firm who shipped their own commodities, or they might be ‘owner-boatmen’ acting on contract with a trader. Owner-boatmen were paid by the voyage and sometimes travelled with their family, who acted as the crew.19 Public carriers had several key features. They accepted the goods of any trader, meaning they did not ship their own goods. Public carriers were generally organized as partnerships (Hanson, 1975). They owned their boats and horses and contracted with shipmasters, who hired an all-male crew.20 The public boats ranged in size. For Birmingham to London, boats were 10 tons at the low end and 22 tons at the high end.21 Some shipped a great distance, like Liverpool to London. There were intermediate stops along the way in manufacturing or market towns.22 As with private carriers, there was a 16 See Ward (1974), Hadfield (1981), Arnold and McCartney (2010) and Broughey and Hadfield (2012). Boughey and Hadfield (2012, ch. 3 pp. 11-12). Also see Report on Sunday trading (p. 6). Note that some canal companies offered inducements for carriers to use their waterway. See Turnbull (1972, p. 146). 18 For more details on turnpike roads see Albert (1972), Pawson (1977), and Bogart (2005a). 19 The Report on Sunday trading (p. 9, 17) describes boatmen and families in 1840. Hanson (1975, p. 21) analyzes owner-boatmen and finds they were 4% of all registered boats in 1795. 20 Report on Sunday trading (p. 54). 21 Report on Sunday trading (p. 47). Vessels on the tidal river trades were larger. Flats on the Mersey and Irwell navigation were 40 to 70 tons (p. 72). 22 Turnbull (1972, p. 32) describes how Pickfords routed through Leek because it was a silk manufacturing town. 17 8 primary haul with higher earnings and a back haul with lower earnings. For example, one carrier shipped coal, slate, and salt from Stafford to Oxford and returned with grain.23 Our study focuses on public carriers for three reasons. First, there is more information on public carriers in sources like directories. Second, the available evidence suggests that public carriers had more boats or they account for most of the revenues associated with canals. Hanson (1975, p. 21) estimates that 61% of all boats registered in 1795 belonged to owners with 6 or more boats, which would probably qualify them as public carriers. Maw (2009, pp. 217-218) has identified the share of toll revenues paid on credit by public and private carriers on the Rochdale canal. Innovation in the Transport Sector Literature Review In 1815 public carriers accounted for £8251 and private carriers £763. Third, we focus on public carriers because they were the main innovators in service quality. Pickford & Co. or Pickfords is the most well-known innovative carrier. According to Turnbull (1972, p. 63), Pickfords entered as a road carrier between Manchester and London in the 1770s. Its first innovation was to introduce a ‘fly wagon’ service in 1776. It cut the travel time from 9.5 to 5 days (p. 43). Next in 1788, the firm introduced a mixed wagon and barge service between Manchester and London (p. 50, 84). The speed of this service was increased in 1797 (p. 89). In 1805, Pickfords provided its first all-canal ‘fly boat’ service to London. Travel times by fly boat reached 7 days in 1806 and then 5 days by 1820 (p. 125). Pickfords expanded their fly boat services to several northern towns in the 1810s and 20s. The firm grew by providing speed and reliability (p. 126).24 2.2 Fly boats 23 Report on Sunday trading (p. 78). Throughout Pickfords faced competition, but usually from one firm offering similar express services (Turnbull 1972, p. 180). Competition usually ended with a merger or exit of one firm. In fact, Pickfords faced financial distress in 1816 (Hanson 1975, p. 28, Turnbull p. 130, 145). 24 9 Fly boats are central to our analysis. They were essentially a different way of organizing freight transport by canal. Hanson (1975, p. 48) describes their essential features as follows: The fly boat started at fixed times, usually carried 15 tons or less, and proceeded with all speed, night and day, to its destination (averaging about 3 m.p.h.), being drawn by relays of horses and worked by four men, two of them resting. Hanson also distinguishes fly boats from so-called ‘slow-boats.’ On the latter, “there was less travelling at night, there was not the brisk turn around at both ends, or the same frantic haste all day and night (p. 52).” These descriptions are supported by the House of Lords Report, Sunday Trading on Canals (henceforth the Report), which detailed features of the canal trade around 1840. Several witnesses in the Report stat … Get a 10 % discount on an order above $ 100 Use the following coupon code : NURSING10