Does distance promote consumption: The role of city shape

Recently, studies have emphasized the consumption amenities of cities, which are as important as city morphology. This study provides empirical evidence that addresses questions regarding the impact of city shape on consumption in China. This study uses night-light data to quantify the compactness of city shapes of Chinese cities. Four indices of city shape were calculated to reflect the different morphological properties of each city. IVs are constructed to mitigate endogeneity problems derived from time-varying historical features and non-time-varying geographical characteristics. The results indicate that higher compactness induces higher consumption by increasing intra-city travel frequency and disposable income. Transforming the samples and empirical equations did not affect the robustness of the results. Heterogeneity exists among households, with high-income households and households with young heads being less sensitive to changes in city-shape compactness. City shape does not affect marginal propensity to consume. This study emphasizes the importance of maintaining a compact city shape, and policies improving the intra-city transportation infrastructure can alleviate the negative consumption impact of non-compact city shapes.