Role of Inter-firm Transactions on Industrial Agglomeration: Evidence from Japanese firm-level data

Author Name NAKAJIMA Kentaro  (Tohoku University) /SAITO Yukiko  (Fellow, RIETI) /UESUGI Iichiro  (Faculty Fellow, RIETI)
Creation Date/NO. March 2013 13-E-021
Research Project Research on Efficient Corporate Financing and Inter-firm Networks
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This paper investigates the role of inter-firm transaction structure on industrial agglomeration by using Japanese firm-level transaction relationship data. First, we measure the industrial agglomeration for each industry. Next, we measure the intensity of transactions and inequalities of transaction partners as the measures of the micro structure of transaction networks in each industry. Then, we regress the index of agglomeration by the indexes of transaction structure. We find that the intensity of intra-industry transactions statistically enforces the agglomeration. Further, the inequality of transaction partners has a negative effect on the agglomeration. This suggests that the industries that attract a few hub-firms have a large number of intra-industry transaction partners that are not agglomerated.