The Impact of Highway Construction on the Profits of Agricultural Enterprises: Evidence From China

ABSTRACT This study employs a quasi‐natural experiment using 7 years (2010–2016) of enterprise tax data from China, leveraging staggered highway openings at the county level to construct a difference‐in‐differences (DID) model. The findings reveal that highway access significantly enhances the profitability of agricultural enterprises. Robustness tests confirm these results. Heterogeneity analysis reveals that highway access has a greater impact on firms producing perishable agricultural products (e.g., vegetables, fruits, livestock, and aquaculture) and those located farther from major markets. Mechanism analysis suggests that highway access enhances agricultural enterprise profitability by improving transportation efficiency, expanding market reach, and lowering operational costs. Further analysis reveals that highway access positively influences firm productivity. These findings offer valuable insights for policymakers seeking to enhance sustainable agricultural development globally.