A new approach to inter‐regional network externalities in Japan

This study evaluates the regional agglomeration and the inter‐regional network economies in Japan based on cost‐based Solow residuals, overcoming the issues associated with the conventional analytical approaches. Furthermore, this study performs a simulation analysis of the economic impacts of the Linear Chuo Shinkansen (magnetic levitation train) to investigate the role of high‐quality transportation infrastructure in regional sustainability. The results reveal that the improvement of inter‐regional networks increases regional productivity. Furthermore, the results reveal that the economic benefits of inter‐regional networks extend beyond railroad lines. These results suggest that inter‐regional networks via high‐quality transportation infrastructure enhance regional economic performance.