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Agglomeration Economies, Mechanization, and Changes in Product Quality: An inquiry into the post-war development of the Sake brewery clusters in Japan, 1980-2020

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  • Yuya AIKAWA
  • Nobuaki HAMAGUCHI
  • Tomoko HASHINO
  • Keijiro OTSUKA

Abstract

While agglomeration economies contribute to the performance of clustered firms, their changing roles are rarely analyzed. This study explores how technology choices and changing nature of agglomeration economies affected firm performance in the Japanese sake (rice wine) brewing industry from 1980 to 2020. Using plant-level data, we find that agglomeration benefits arose from the sale of sake from small unknown firms to large established firms when production was labor-intensive, but its role diminished as scale economies emerged with mechanization. As demand for high-quality sake increased, collective internalization of information spillover benefits appears to become a major source of agglomeration economies.

Suggested Citation

  • Yuya AIKAWA & Nobuaki HAMAGUCHI & Tomoko HASHINO & Keijiro OTSUKA, 2025. "Agglomeration Economies, Mechanization, and Changes in Product Quality: An inquiry into the post-war development of the Sake brewery clusters in Japan, 1980-2020," Discussion papers 25041, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:25041
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