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Density economies and transport geography: Evidence from the container shipping industry

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  • Xu, Hangtian
  • Itoh, Hidekazu

Abstract

By exploiting the 1995 Hanshin earthquake, which occurred in Japan, as an exogenous shock to the container shipping industry of northeastern Asia, this study provides an empirical relevance of the role of transport density economies in shaping the transport geography. The Hanshin earthquake caused severe damage to the Kobe port. Consequently, its container throughput was largely diverted to the nearby Busan port, which scaled up in this windfall. Focusing on the long-term growth of major port areas in northeastern Asia, we find that extensive diversions of container traffic occurred after the earthquake from Tokyo and Yokohama ports to Busan port, although container shipping operations in Tokyo and Yokohama ports were not directly affected by the earthquake. We interpret the economies of transport density benefitting Busan as the underlying mechanism; increased transport density allows Busan port to further enlarge its hinterlands and reshape the transport geography. We also find that the unintended diversions of container shipping lead to a structural change of manufacturing pattern in related regions.

Suggested Citation

  • Xu, Hangtian & Itoh, Hidekazu, 2016. "Density economies and transport geography: Evidence from the container shipping industry," MPRA Paper 75580, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:75580
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    References listed on IDEAS

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    1. Ducruet, Cesar & Tsubota, Kenmei, 2018. "Regional disintegration in South Asia : evidence from the end of the British Empire on maritime networks," IDE Discussion Papers 708, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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    More about this item

    Keywords

    hub port; density economies; transport geography; earthquake;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • L0 - Industrial Organization - - General
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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