This paper uses micro-level data encompassing the universe of Portuguese private firms for
the period 2006-2016 to analyse the effect of the introduction of tolls on previously toll-free
highways. To establish causality, we rely on a natural experiment which resulted from
Portuguese authorities being forced to in- crease these transportation costs in some highways
during the sovereign debt crisis. Difference-in-differences results show a 10.7% decrease of
turnover in firms located in affected municipalities vis-à-vis firms in the remaining areas, on
average. Firm profits were also severely hit and reduced by more than 15%. Both sales and
purchases to/from the internal market and abroad (especially to/from EU countries) were
affected. Furthermore, employment reduced 2% in treated areas. Importantly, our findings do
not uncover induced inter-regional firm migration, suggesting that the tolls have induced a
substantial net loss to the Portuguese economy.
