Changes of Regional Consumption Structure and Its Impact on Local Economies Due to Advancements in E-Commerce

Author Name ISHIKAWA Yoshifumi (Nanzan University) / NAKAMURA Ryohei (Faculty Fellow, RIETI)
Creation Date/NO. August 2023 23-J-029
Research Project Verification of regional revitalization and regional and urban economies after the Coronavirus Pandemic
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The advancement of electronic commerce, including online purchases through the internet, is astounding. Especially during the COVID-19 pandemic, there has been a significant increase in both the per-household expenditure on internet-related activities and the proportion of households making purchases through the internet, leading to a substantial expansion of the market size. Historically, local governments have aimed to boost intra-regional consumption by promoting commercial development within their areas, as the presence of large-scale retail stores in neighboring regions would result in consumption leakage. However, in the case of e-commerce, consumers may exhibit behavior driven by factors that are distinct from those influencing traditional store selection.

In the case of e-commerce, where distance resistance is virtually absent, the potential for significant spatial disparity between consumption destinations and supply sources emerges. Consequently, this study delves into the determinants of purchase rates within e-commerce. The analysis indicates that factors such as the scale of retail store locations within the region, the age-specific population distribution, proximity to adjacent municipalities, and the degree of urbanization have an impact on purchase rates driven by e-commerce activities within the region.

As consumer participation in e-commerce grows, it leads to a decrease in local purchase rates. This reduction in local purchase rates further affects regional circulation through the interconnected structures of industrial relationships and income consumption. In this study, the authors incorporate variations in intra-regional consumption rates into a small-region-level income-consumption endogenous interregional input-output model developed by the authors, enabling an analysis of the impact of the advancement of e-commerce on the regional economy.