The impact of rail dispatch system reform on import by rail — Empirical evidence from a natural experiment in China

China centralized the rail dispatch office from branch bureaus to rail bureaus in 2005. This provides a rare natural experiment to investigate how the rail dispatch office operational efficiency can affect import by rail. Using China's rail operational data and import trade data for the 2004–2006 period, we employed the difference-in-differences (DID)regressions to evaluate the reform's effect on import by rail. Specifically, we found that centralizing the rail dispatch office has downgraded the dispatch operational efficiency. This is mainly because of the significant cut of dispatch resources, which caused job overload and stress for the remaining dispatcher. As a result, the import by rail has been significantly reduced, measured in terms of both “intensive” and “extensive” margins at both firm and product levels. In addition, it is found that the private and foreign-owned firms were more negatively affected. We have also offered several policy implications when discussing the estimation results.