An NEG approach to verifying the Straw Effect: Evidence from the Akashi-Kaikyo Bridge in Japan (Japanese)

Ryusuke Ihara, Ryohei Nakamura and Manabu Morita

Discussion Papers (Japanese) from Research Institute of Economy, Trade and Industry (RIETI)

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.

Pages: 25 pages
Date: 2015-07
New Economics Papers: this item is included in nep-geo, nep-tre and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:eti:rdpsjp:15045

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