Linking spatial economics and sequencing economics for the Osaka tourism agglomeration

An agglomeration is an organization composed of its segments such as infrastructure and institutions. Sequencing economics discusses the sequential process analysis of building the segments of an agglomeration. The concept of 'economies of sequence' can be defined as the selection of any two segments from among the set of segments of an agglomeration and the sequencing of the segments toward the efficient building of an agglomeration. A central place theory in spatial economics gives the initial conditions of sequencing the segments of the tourism industry agglomeration as the economies of sequence. Using Proposition 1 in Henkel et al. (2000) and analyzing the corollary of the proposition additionally, we interpret our results obtained from Granger causality testing. The corollary is that a symmetric equilibrium is more likely to become unstable and break when substitutability between differentiated goods and transport costs becomes sufficiently low. The first priority in the order of the sequencing of segments in a tourism industry agglomeration is thereby given to those of low transport costs and substitutability between differentiated goods. We find that the first priority segment is Universal Studio Japan to lower the degree of substitutability between the differentiated goods and that the second is Kansai International Airport to reduce transport costs.