Abstract
The purpose of this paper is to reveal the conditions for maintenance and development of economies of agglomeration in Japanese industrial districts.The existing theory of industrial districts in Japan has focused on the supplier-side logic and insists that a necessary condition for small-scale manufacturers (suppliers) to enjoy economies of agglomeration is the existence of local markets for special skills within the industrial district. On the other hand, it has been unconcerned with the purchaser-side logic. To shed light on the purchaser-side logic, we interviewed large retail firms in the role of purchasers for industrial districts and 21 smallscale firms located in Tokyo's Ota Ward and Joto area having the role of supplier. These interviews clearly showed the importance of business practices called “Kouza” and “Chouai”. Large enterprises on the purchaser side deal only with kouza-holding firms (direct suppliers) and chouai-saki which coordinate sub-suppliers.Assuming these business practices, for purchasers the presence within the industrial district of firms holding kouza becomes a necessary condition of enjoying economies of agglomeration. In conclusion, this paper proposes a new model of industrial districts combining supplier-side and purchaser-side logic.
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