Transport Costs Drive Regional Specialization in Japanese Manufacturing Industries.
Regional specialization in Japanese manufacturing industries is influenced by differences in transport costs. Industries with high transport costs stay close to the core region, while those with low costs move to the periphery. A new economic geography model shows that industries with higher adjusted transport costs tend to cluster in one region, leading to regional specialization. Congestion can also impact industry dispersal, but as congestion decreases, regional specialization becomes more pronounced.