The Economies of Density and Scope and the Regional Gap of the Japan Railway after the Privatization

Abstract

It is said that the privatization of the Japanese National Railway is a success since the management, productivity, and service have improved. However, as expected, the gap of both management and productivity tends to widen between the larger main-island JRs and the smaller three-island JRs. This paper will estimate the cost structure of the six JRs after the privatization. The main points we will make are as follows：first, the economies of density exist in both the incumbent railway service and the Shinkansen service；second, there is no conclusive evidence to show that the economies of scope exist between them ; third, the cost gap between the main-island JRs and the three-island JRs is large；and fourth, the cost gaps within them are also large.