When making a location decision, a firm considers only its own trading costs and ignores trading costs paid by trading partner firms. The exclusion of the latter is the source of locational externalities. We examine this locational externality in the Tokyo metropolitan area, using the actual...

Using a unique dataset of more than 140,000 manufacturing firms in Japan containing information on their suppliers and customers, this paper looks at the physical distances be- tween transaction partners to examine the localization of transaction relationships. We find the following. First,...

This paper uses firm‐level data to examine how supply chain networks affected the recovery of firms from the Great East Japan Earthquake. Extensive supply chains can negatively affect recovery through higher vulnerability to network disruption and positively through support from trading...