Abstract
Kansai economy greatly depends on the manufacturing industry sector. However, the establishments and enterprises in Kansai which had about 90, 000 in 1985 fall down to about 65, 000 in 2000. This is an evidence of de-industrialization in Kansai. On one hand, this phenomenon can be explained from the economics of agglomeration as the Tokyo monopolar system. On the other hand, the three laws governing industrial location might play an important role in this phenomenon. In the present paper, separating the Kansai into the restricted zone where the new establishment and extension of factories were forbidden and the nonrestricted zone, we estimated the industrial production function to examine whether the economics of agglomeration would exist or not. From the result, we find that some industries were hindered the economics of agglomeration in spite of the existence of the economics of agglomeration. Moreover, some industries do not have economics of agglomeration in the restricted zone because of the three laws governing industrial location.
