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How links are formed according to the distance in transaction network of 800,000 firms

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  • Tomohiko Konno

    (Princeton University)

Abstract

We studied how links are formed according to the distance in transaction network of 800,000 firms. We investigated the inter-firm transaction network of $800,000$ firms in Japan. They are almost all firms in Japan. As far as we know, scale-freeness, hierarchy, and degree-degree correlation were discovered as fundamental characteristics in the network before the present paper. We discovered another fundamental characteristic as to distance. Distance plays an important role in the network. The number of transaction links between two regions is proportional to the product of the sales (degrees) of the two regions divided by the distance between the two regions. This is of a form of the gravity equation. It implies that the further the firms are, the less likely it is that they are linked in the network.

Suggested Citation

  • Tomohiko Konno, 2012. "How links are formed according to the distance in transaction network of 800,000 firms," Economics Bulletin, AccessEcon, vol. 32(4), pages 3279-3286.
    • Handle: RePEc:ebl:ecbull:eb-12-00701
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    Keywords

    Inter-firm Transaction Network;

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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