The Impact of Agglomeration Economies on Energy Efficiency in Japan


While environmental constraints are being strengthened, an important question that arises for Japan's economic policy is how to best achieve regional economic growth and energy efficiency. This study examines the impacts of agglomeration economies that boost economic growth on the energy efficiency of Japanese manufacturing industries. Using a prefectural-level panel data set from the Energy Consumption Statistics, this study obtained new empirical results: (1) agglomeration economies improve energy efficiency of Japanese manufacturing industries; (2) localization economies positively impact the improvement of energy efficiency in local areas, while urbanization economies positively impact the improvement of energy efficiency in large metropolitan areas. That is, it has been determined that while agglomerating similar industries is effective to improve energy efficiency in local areas; in large metropolitan areas, it is more effective to agglomerate diverse industries to improve energy efficiency. In general, industrial agglomeration as a result of economies of agglomeration, based on localization, occurs for the most part in medium-sized cities. The result therefore suggests that it is more appropriate to formulate medium-sized cities than large metropolitan cities for improving the energy efficiency of manufacturing industries located in local areas.

Author Information
Akihiro Otsuka, Central Research Institute of Electric Power Industry, Japan
Mika Goto, Tokyo Institute of Technology, Japan

Paper Information
Conference: ACSEE2015
Stream: Energy: Energy Economics and Ecological Economics

This paper is part of the ACSEE2015 Conference Proceedings (View)
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Posted by James Alexander Gordon