The Power of Wings: How Do Air Connections Bring New Ideas in China

How does physical connectedness stimulate new ideas? This paper explores this question in the context of China, one of the largest countries and an innovation powerhouse of the world. Exploiting variation in air connectivity across time and space, we find that the introduction of non-stop air connections between cities boosts collaborative innovation, especially for long-distance city pairs. This improvement goes with reducing costs of face-to-face interactions, hence promoting knowledge flows. Further analysis shows that the disparity of within-city-pair innovative capability increases following direct air connections, and the effects on collaborative innovation are more pronounced in city pairs involving mega and smaller cities and enterprise innovators who are sensitive to travel costs.