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Damage to the Transportation Infrastructure and Disruption of Inter-firm Transactional Relationships

Kaoru Hosono, Daisuke Miyakawa, Arito Ono (), Hirofumi Uchida and Iichiro Uesugi

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

Abstract: We investigate the effects of an exogenous increase in transportation costs caused by the disruption of a highway due to the Tohoku Earthquake in Japan, on inter-firm transactional relationships and firm performance. We find that as the transit time to partner firms (suppliers and customers) increased due to the disrupted highway, the likelihood of continued transactional relationships decreased. This effect is more pronounced when the corresponding partner is a customer with a lower share of sales. We also find that the disruption to the transactional relationships deteriorates the firms' ex-post business conditions and credit scores.

Pages: 39 pages
Date: 2019-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-tre and nep-ure
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Handle: RePEc:eti:dpaper:19043