Apr 1, 2013 - Mar 31, 2015

General Equilibrium Analysis of Economies of Networks and Agglomeration

In this study, we develop an analytical framework to investigate policies for development and operations of transportation networks, consisting of airports, seaports, railways, and roads, and knowledge networks.

Emergence of new developing economies has urged all the countries to compete with each other for being a core of the globalizing economies. In the field of transportation, it is crucial that an economy can take a role of a network hub. Governments try to invite large airports and seaports for their spillover effects to production and consumption in the hinterlands. Network hubs can catalyze efficient uses of domestic resources and attract foreign resources through foreign direct investment.

However, international airports in Japan are strictly regulated (e.g., Narita Airport) and have only gradually been restructured by merging neighboring airports (Osaka-Itami and Kansai Airports); planning and investment of these airports are not either dynamic or effective compared with those for other Asian airports. While the capacity of major airports such as Haneda Airport and their high-speed access transportation is very poor, a large amount of investment is carried out for many rural airports and highways with abundant capacity. None of shrinking population and stagnating economy allows inefficient and ineffective investment in Japan any longer. No exceptional treatment could be called for the transportation system that was destroyed by the Great East Japan Earthquake and expected to be reconstructed with public funds.

In conventional analysis, individual economic phenomena have been focused while omitting their interactions and linkages in an integrated network system. However, economies of network do not allow us to take this approach. The sum of partial equilibrium solutions does not match the general equilibrium solution. We, thus, employ the “Spatial Equilibrium Analytical Framework” to investigate the economies of network and their policy implications in a general equilibrium perspective. We set focuses on the following policy issues:

1. Interaction between transportation system development and locational choice of industries
2. Equilibrium choice among multiple equilibria
3. Comparison of the general and the partial equilibrium approaches in the cost-benefit analysis for transportation system investment projects
4. The role of recycling hubs in venous physical distribution networks

For these analyses, we also take a numerical approache with dynamic and static settings.