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Transaction Partners and Firm Relocation Choice: Evidence from the Tohoku Earthquake

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  • ONO Arito
  • MIYAKAWA Daisuke
  • HOSONO Kaoru
  • UCHIDA Hirofumi
  • UCHINO Taisuke
  • UESUGI Iichiro

Abstract

A firm's choice of location is very important because it reveals the firm's dynamics. Using a unique firm-level data set, we examine whether and how the presence of incumbent transaction partners (i.e., suppliers, customers, and lender banks) affects this choice. To this end, we focus on those firms that were forced to relocate their headquarters because of the severe damage inflicted upon them by the Tohoku Earthquake. We find that, after the earthquake, firms tended to move to areas where their customers were located, but not to areas where their suppliers were located. We also find that firms tended to move to areas where the bank branches with which they had transacted were located. Furthermore, we find that the sizable impact of the presence of incumbent customers and banks on the probability of the firms' relocations diminished if the customers and the bank branches also suffered damage from the earthquake. On balance, these results suggest that the presence of healthy transaction partners is an important factor in the firms' choice of location.

Suggested Citation

  • ONO Arito & MIYAKAWA Daisuke & HOSONO Kaoru & UCHIDA Hirofumi & UCHINO Taisuke & UESUGI Iichiro, 2014. "Transaction Partners and Firm Relocation Choice: Evidence from the Tohoku Earthquake," Discussion papers 14054, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:14054
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    Cited by:

    1. Uchida, Hirofumi & Miyakawa, Daisuke & Hosono, Kaoru & Ono, Arito & Uchino, Taisuke & Uesugi, Iichiro, 2015. "Financial shocks, bankruptcy, and natural selection," Japan and the World Economy, Elsevier, vol. 36(C), pages 123-135.
    2. Hayakawa, Kazunobu & Matsuura, Toshiyuki & Okubo, Fumihiro, 2015. "Firm-level impacts of natural disasters on production networks: Evidence from a flood in Thailand," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 244-259.
    3. Takano, Keisuke, 2019. "Does visible shock update firms' unrelated trade diversity in anticipation of future shock? Evidence from the Great East Japan Earthquake and expected Nankai Trough Earthquake," TDB-CAREE Discussion Paper Series E-2019-01, Teikoku Databank Center for Advanced Empirical Research on Enterprise and Economy, Graduate School of Economics, Hitotsubashi University.

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    More about this item

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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