City Size, Internal Migration and Non-tradable Goods Variety: Evidence from Meituan-Dianping
As one of the most representative traits of Chinese culture, Chinese cuisines are world famous and a reflection of soft power. However, the literature on the Chinese cuisine industry is significantly insufficient, and few papers have considered variety welfare across the whole country.We attempt to determine the distribution rule of non-tradable goods in China. Modern economics, especially new trade theory, pays more attention to the distribution rule, as preference for variety is a basic assumption of modern economic theory(Armington, 1969). Studies from Krugman until now have gradually determined that the scale economy, which comes from the agglomeration effect of supply, can increase the number of varieties in production and promote variety welfare(Krugman, 1979, 1980, 199 la; Broda & Weinstein, 2006). In contrast, the rule of consumption and non-tradable goods remain misunderstood.According to the urban economy, all location-based services or goods that are differentiated and patronized by consumers with a specific set of preferences can be regarded as non-tradable goods. Due to the two main characteristics of non-tradable good, including transport cost heterogeneity and low substitution, more scholars have recognized that varieties of non-tradable goods can better proxy for a city’s non-tradable goods welfare than other indexes. In addition, scholars have determined that non-tradable goods are among the major sources of a city’s amenities(Glaeser et al., 2001) and one of the most important factors attracting people to live in a city(Chen & Rosenthal, 2008; Lee, 2010). Therefore, it is important to study the distribution rule of non-tradable goods for urban development.China’s huge population and unique population mobility pattern also motivate our research. The 12 th and 13 th Five-Year Plans insist that big cities should limit population inflow, which has made China’s population uniquely fluid. Recent empirical work has shown that industrial composition varies systematically with population size(Mori et al., 2008; Mori & Smith, 2011; Hsu, 2012; Schiff, 2015). However, there is an extreme spatial mismatch between the economy and population that weakens the urban population agglomeration effect and scale economy effect(Lu, 2013). Thus, we research the potential loss of non-tradable goods variety welfare against the background of limiting population mobility policy.We acquire the cuisines data from Meituan-Dianping(dianping.com)There are two classification standards for cuisines, including categories and dishes, which can proxy for the varieties of a local city. Compared with other studies, ours makes three main contributions. First, we first use big data to proxy for the varieties of non-tradable goods in a Chinese city; second, we discuss the relationships between China’s population size, population structure, and varieties of non-tradable goods; third, we estimate the loss of non-tradable goods variety welfare in a Chinese city under the population mobility restriction policy. We combine the cuisines data from dianping.com in 2015 and consider the sixth census and land data at the city level to empirically test the causal relationship between population size and structure and the variety welfare of non-tradable goods. We find that the elasticity of variety in terms of population is between 0.528 and 0.696, while that in terms of fluid population is between 2.19 and 3.56. That is, the "fluid population" not only serves as a special category for the city, but also encourages the city to create new categories.This paper supports the positive promoting effect of population scale and structure diversity on the variety welfare of non-tradable goods. Based on our estimation of the instrumental variables, we use varieties of non-tradable goods as welfare indicators through numerical simulations to estimate the potential losses of Chinese cities under different parameters of logarithmic normal distribution. The results show that the current limits on population mobility result in a huge variety welfare loss especially for big cities, but have a protective effect on small and medium-sized cities.