| Author Name | IHARA Ryusuke (Asia University) / NAKAMURA Ryohei (Faculty Fellow, RIETI) / MORITA Manabu (Aomori Chuo Gakuin University) |
|---|---|
| Creation Date/NO. | July 2015 15-J-045 |
| Research Project | Seeking Sustainable Regional Economies in the Economic Globalization Age |
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Abstract
This paper investigates the straw effect in the framework of new economic geography (NEG). The straw effect specifically in Japan refers to the provisioning of transportation infrastructure such as shinkansen lines, bridges, highways, etc. that worsens the economic foundation of the local areas. The reason is explained by NEG: the decrease in transport costs stimulates interregional competition, which results in the agglomeration of economic activities. Using an NEG model of the 47 prefectures, we analyze the effect of transportation infrastructure on regional economic foundations. First, the estimation of shipment values in the manner of regional potentials derives elasticity of substitution by industry. Then, by focusing on the market/competition expansion effects of transportation infrastructure, we show the conditions in which the straw effect occurs. Finally, we show that our methodology makes it possible to predict whether the construction of new transportation infrastructure will have positive or negative effects on the prefectures.
Forthcoming: Morita, Manabu, Ryusuke Ihara, and Ryohei Nakamura. "An NEG approach to verifying the straw effect: Evidence from the Akashi-Kaikyo bridge in Japan," JCER economic journal.
