Abstract: What is the impact of transport infrastructure on innovation? I study the historically unprecedented boom of the railway network in 19th Century England, which reduced average travel time between London and Birmingham by 80% between 1830 and 1911. Using "accidentally connected" locations I show that building a rail station caused patents per capita to increase by over 75% in a district. I find no evidence that this effect was due to the relocation of existing inventors. The positive railroad effects are driven by two distinct channels: increased market access (a demand-induced innovation effect) and greater knowledge flows through improved communication. These two mechanisms are economically and statistically significant. Across 1823-1861 the median Donaldson-Hornbeck measure of market access approximately doubles; a doubling of market access increases innovation by over 50%. The market access effect accounts for more than 40% of the direct effect of a local rail station.

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