Transportation (2018) 45:677–701

https://doi.org/10.1007/s11116-016-9746-y

Unequal regional impacts of high speed rail

on the tourism industry: a simulation analysis
of the effects of Kyushu Shinkansen

Tomoru Hiramatsu1

Published online: 7 November 2016

 Springer Science+Business Media New York 2016

Abstract Many high speed rail (HSR) routes are under construction in various cities of the
world. Although tourism is one of the industries affected by HSR, not much is known about
its effects on the same. This paper studies the impact of Kyushu’s HSR (Shinkansen) on
tourism using computable general equilibrium modeling in the context of regional
economies and transportation. The results show that the HSR has unequal effects on
tourism among prefectures. The presence of these inequalities depends on whether the
prefecture is a served by HSR, whether it is a terminal or an intermediate HSR station, and
its current popularity with the tourists. Despite these inequalities, the economies of all the
prefectures are benefited by the HSR owing to general equilibrium effects.

Keywords High speed rail  Tourism  Regional inequality  Computable general

equilibrium

Introduction

High Speed Rail (HSR) plays a significant role in many countries. Furthermore, several
HSR projects are under construction or being planned. Thus, the importance of studying
the possible impact of HSR on the economy is evident. The tourism industry is also
influenced by HSR, as it reduces transportation costs and helps develop tourism destina-
tions. However, HSR exerts both positive and negative effects on tourism, and the net
outcome is not consistently positive (Albalate and Fageda 2016). For example, the intro-
duction of HSR has redistributed and transformed tourism markets, a major example being
the relocation of urban tourism centers in China (Wang et al. 2012). Improved accessibility
often reinforces spatial competition between tourism destinations (Masson and Petiot

& Tomoru Hiramatsu

hiramatsu@kumagaku.ac.jp
1
Kumamoto Gakuen University, Kumamoto, Japan

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678 Transportation (2018) 45:677–701

2009). Delaplace et al. (2014) show that the presence of the HSR affects tourists’ choice
between Paris and Rome. The presence of HSR has also been shown to significantly
heighten tourists’ preference to visit cities close to Madrid (but not Madrid itself) (Pagliara
et al. 2015). Thus, previous studies show an interesting relationship between HSR and
tourism. At the same time, they infer that the impact of HSR on tourism is unclear and that
HSR might cause undesirable inequalities among regions. To get to the root of the matter,
this paper aims to study the relationship between HSR and tourism using an economic
simulation approach.
As some of the previous studies have pointed out, factors other than HSR availability
also influence tourism choices. For example, tourism promotions attract visitors for a
limited period of time. Undesirable accidents such as natural disaster curtail tourism
activities. On the other hand, areas not affected by such events are considered suit-
able destinations. Thus, the factors affecting HSR-related tourism travel can be categorized
as follows: (i) The tangible effects of transportation, namely, the reduction in travel time
due to the presence of the HSR, and (ii) the less tangible effects of transportation, namely,
the fact that the travel mode itself becomes the reason for the tour (e.g., the Glacier Express
of Switzerland, the Rocky Mountaineer of Canada, the Nanatsuboshi of Kyushu), (iii) the
wealth of sightseeing resources, namely, the availability of destinations that present the
country’s historical heritage and natural scenery, or provide entertainment to attract
tourists, and (iv) the modes used to promote these sightseeing resources, such as through
events designed to attract tourists. In reality, additional factors (other than those mentioned
above) affect tourism destination choices. For example, the exchange rate is an important
factor affecting the outflow and inflow of tourists (see, for example, Eymann and Ronning
(1997)). Furthermore, the economic situation of the destination and the areas surrounding it
also affects tourist numbers. HSR line must consider a wider geographic area than cities
(Sánchez-Mateos and Givoni 2012). Thus, it is important to analyze its interregional areas
(Vickerman 2015). It is highly likely that the effects of HSR are unequal among different
areas.
The input–output (I–O) model or the social accounting matrix (SAM) model are popular
tourism analysis methods. However, these models require restrictive assumptions such as
the existence of no resource constraint and free resource supply, a constant returns to scale
production function with no substitution among the different inputs, and fixed input and
output prices. These assumptions exaggerate the economic impacts of tourism (see Dwyer
(2015a) for a list of features of the I–O model). A computable general equilibrium model
(CGE), which accounts for real world features of demand and supply, is suitable technique
for tourism analysis. However, concerns about CGE are addressed in Dwyer (2015b), such
as it being difficult to use, expensive to develop, difficult to understand, and demanding in
terms of data required, the use of ‘‘out of date’’ data, the lack of a ‘‘standard’’ CGE model,
and model validation. An additional question on CGE that adds to Dwyer’s (2015b)
concerns is the extent of reliability. The CGE models are calibrated to marginal elasticity.
As such, it is necessary to be aware that simulation results leave margin for error when
studying a large impact such as HSR introduction. Accounting for strengths and weak-
nesses, CGE analysis plays a role in the overall economic analysis. Koike et al. (2014), for
instance, apply CGE to actual data on Japan and analyze HSR and CO2 emissions. There
are reviews of other CGE applications presented in Koike et al. (2014) and Brocker and
Mercenier (2011).
To analyze unequal economic impact among regions, multi-regional CGE is an
appropriate approach. The present paper analyzes the direct and indirect effects of HSR on
tourism in Kyushu, Japan, modifying and applying the CGE model in the context of

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regional economies and transportation of Anas and Liu (2007). Kyushu is a good candidate
as our case study; it is not only possible to compare the prefectures of Kyushu in economic
terms but also to study the effects of the recently functioning HSR on tourism in these
prefectures. Ideally, we would expect that the prefectures located along the HSR route
would gain more tourists. However, the results of this paper unveil the unequal impacts
between the prefectures that serve as HSR terminal stations and intermediate stations.
Another point to note is that if a prefecture was a destination of preference to tourists
before the HSR started functioning, it is likely to continue attracting tourists even if the
HSR does not serve that prefecture. Notably, as tourists travel from one prefecture to
another, the former prefecture or the origin prefecture also plays a vital factor in this
assessment. If the population of the origin prefecture increases, the number of tourist
arrivals to the destination prefecture would also increase. Similarly, it is important to notice
that the HSR will not only increase tourist arrivals from other prefectures but also tourist
arrivals within the prefecture it serves. In addition to the number of tourists, we analyze the
impact of the HSR on the whole economy since the boom in the tourism industry has
affected other industries (Kadiyali and Kosová 2013), and tourism development can
contribute to the reduction in regional inequality (Li et al. 2016). In the simulation, the
prefectures that did not gain in tourist arrivals may benefit in terms of the gross product
(GP). This is because the economic stimulation in one prefecture can spill over to other
prefectures and industries. The assessment of such unequal impacts of the HSR and
spillover effects caused by it is only possible with a multi-regional CGE. In the base
simulation, we assume that the introduction of the HSR shortens travel time. This simu-
lation addresses the tangible effects of HSR transportation, as explained above. We use
data mainly from 2010 for the calibration. To allow comparison, two parameters affecting
consumer choices are changed and recalibrated for the other simulations.
The remainder of this paper is organized as follows. We introduce the Kyushu Shin-
kansen (henceforth HSR) in Sect. 2. The simulation model is explained in Sect. 3. Sec-
tion 4 presents the data. Section 5 provides the results of the simulation with the basic
setting, while Sect. 6 presents the comparative statics. Section 7 concludes.

HSR and prefectures in Kyushu

Kyushu HSR

Figure 1 shows the location of Kyushu in Japan. Figure 2 shows the seven prefectures of
Kyushu and its HSR routes through Kagoshima and Nagasaki. The first HSR in Japan,
Tokaido HSR, was constructed between Tokyo and Osaka in 1964. Since then, many more
HSR have been constructed (Nakagawa and Hatoko 2007). Currently, some HSR routes are
under construction or scheduled for construction (e.g., the linear Tokyo–Nagoya–Osaka
HSR).
There are two HSR routes in Kyushu: the Kagoshima route, connecting Fukuoka–
Kumamoto–Kagoshima, and the Nishi–Kyushu route (hereafter, the Nagasaki route),
connecting Fukuoka–Saga–Nagasaki.1 Nagasaki route is still under construction. A part of
the Kagoshima route (between Kumamoto and Kagoshima (127 km)) started operation in
2004, and the last part of the route (between Fukuoka and Kumamoto) became operational

1
Although the Nagasaki route was constructed between Nagasaki and the existing railway track in Saga, we
refer to the Nagasaki route as joining Fukuoka, Saga, and Nagasaki.

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680 Transportation (2018) 45:677–701

Tokyo
Osaka

Fig. 1 Map of Japan. The box shows the location of Kyushu

1.

2. 5.

3.
4.

6.

7.

Prefectures: 1. Fukuoka, 2. Saga, 3. Nagasaki, 4. Kumamoto, 5. Oita, 6. Miyazaki, and 7. Kagoshima

Fig. 2 Map of Kyushu showing its prefectures and HSR routes Note: Kagoshima HSR route is shown
between Fukuoka and Kagoshima and the planned Nagasaki HSR route is shown between Fukuoka and
Nagasaki. Note that the Nagasaki route shown in the figure is only indicative of the actual routes.
Prefectures: 1. Fukuoka, 2. Saga, 3. Nagasaki, 4. Kumamoto, 5. Oita, 6. Miyazaki, and 7. Kagoshima

in 2011.2 The total length of the Kagoshima route is 257 km. The Kyushu HSR and Sanyo
HSR (outside Kyushu) are connected so that passengers can travel without transferring if

2
Website of Kumamoto city referring to the development near Kumamoto station (in Japanese), http://
www.city.kumamoto.jp/hpKiji/pub/detail.aspx?c_id=5&id=4231&class_set_id=3&class_id=666.

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Transportation (2018) 45:677–701 681

they wish to cross the strait. The reduction in travel time on account of the HSR and its
costs in JPY(¥)3 are as follows (Table 1).4 We also include information for the corre-
sponding air travel mode. Note that there are types of discount prices for HSR and air
travel in reality.

Prefectures in Kyushu

Tables 2 and 3 show the basic information pertaining to the model, calibrated from the data
introduced in Sect. 4. We consider only the adult population as consumers. According to
Table 2, Japan’s adult population numbers 109.4 million, of which 11.3 million reside in
Kyushu. Within Kyushu, the most populated prefecture is Fukuoka (4.36 million), fol-
lowed by Kumamoto (1.55 million). The most popular tourism destination is Fukuoka
(16.04 million), followed by Oita (10.04 million).5 On the other hand, Miyazaki and Saga
hardly attract tourists. Except Fukuoka, the number of tourist arrivals exceeds the number
of departures. Nagasaki attracts relatively more tourists from outside the prefectures,
unlike Kagoshima. Fukuoka and Saga recorded a relatively higher number of departures to
locations other than Kyushu’s prefectures, unlike Kagoshima. Notably, within Kyushu,
Fukuoka accounted for more than half the number of departing tourists. Tourism refers to
the activity of visitors.
Table 3 shows the modeled consumer expenditures for arriving and departing tourists,
gross product (GP) of the endogenous sector, GP of final demand, and total GP. Fukuoka
records the largest numbers for all listed terms. Although Kumamoto shows the second-
largest numbers for many terms, it ranks third in terms of tourist expenditure for arrival
tours. The second-largest tourist expenditure for arrival tours is that of Oita. Although
Kagoshima shows the third-largest figures for many terms, its tourist expenditure for
arrival tours ranks rather low (fifth place). Table 3 shows that Oita is a relatively good
tourist destination. Contrarily, Saga and Miyazaki are relatively poor tourist destinations.

Model

We explain the consumer’s behavior in Sect. 3.1. Consumer behavior consists of three sub-
components: travel mode choice, the consumer’s utility maximization problem, and
decomposition of tourism goods demand, which are presented in detail in Sects. 3.1.1 to
3.1.3, respectively. The producer’s behavior is explained in Sect. 3.2. Depending on
industry type, there are three types of producers who minimize the production cost.
Specifically, we refer to the producer’s cost minimization problem with regard to basic
industries, the developer’s problem, and the producer’s final demand goods problem.
Section 3.3 explains the CGE model.

3
The exchange rate of JPY(¥) and USD($) is ¥1 = $0.010021 in Aug 18, 2016.
4
Ministry of Land, Infrastructure, Transport and Tourism (one year after the inauguration of the Kyushu
Shinkansen - Kagoshima route) (in Japanese), http://wwwtb.mlit.go.jp/kyushu/gyoumu/kikaku/file31/
201207kotsukikakuka8.pdf.
5
Tourism refers to the activity of visitors. The number of tourists here includes individuals on sightseeing
and business trips as well as those visiting friends and relatives. See World Tourism Organization for more
information, http://www2.unwto.org/.

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682 Transportation (2018) 45:677–701

Table 1 Comparison of routes with and without the HSR

Route Previous travel Current travel time Cost of travel Cost of Travel Cost of
time (without the (shortened by the without the travel by time by travel by
HSR) HSR) HSR HSR air air

Kumamoto– 3 h and 57 min 2 h and 58 min ¥16,540 ¥18,020 2 h and ¥23,500

Osaka 6 min
Kagoshima– 5 h and 02 min 3 h and 42 min ¥21,000 ¥21,300 2 h and ¥26,800
Osaka 14 min
Fukuoka– 2 h and 12 min 1 h and 17 min ¥9,420 ¥10,170 1 h and ¥18,600
Kagoshima 26 min
The 143-km long Nagasaki route, (Website of Nagasaki prefecture (Kyushu Shinkansen—West Kyushu
route) (in Japanese), http://www.pref.nagasaki.jp/bunrui/machidukuri/doro-kotsu/shinkansen/) which is
currently under construction, will connect Fukuoka and Nagasaki. On completion, it will reduce travel time
to 28 m from 1 h 48 min to 1 h and 20 min

Table 2 Model calibrated adult population and number of tourists (millions)

Adult Tourist arrivals Tourist departures
population
Total From within From other Total To locations To other
the prefecture prefectures within the prefectures
prefecture

Fukuoka 4.36 16.04 4.55 11.49 23.91 4.55 19.35

Saga 0.71 2.46 0.00 2.46 1.43 0.00 1.43
Nagasaki 1.22 7.65 1.76 5.89 5.56 1.76 3.80
Kumamoto 1.55 9.44 2.00 7.45 6.06 2.00 4.06
Oita 1.04 10.04 2.73 7.31 6.30 2.73 3.57
Miyazaki 0.96 2.41 1.05 1.35 3.04 1.05 1.99
Kagoshima 1.45 4.72 2.06 2.65 4.58 2.06 2.52
Japan 109.4 599.1 148.1 451.0 599.1 148.1 451.0
Kyushu 11.3 52.8 14.2 38.6 50.9 14.2 36.7

Consumer’s behavior

Travel mode choice

If we regard each prefecture in Japan as one area, we would have 47 areas. Prefectures are
connected by transportation systems. The five available travel modes are automobile, train,
non-motor mode (i.e., walking or bicycling), air, and bus. Automobiles cause traffic
congestion. The travel time by automobile on each link is expressed by the Bureau of
Public Road (BPR) type function. One of the direct effects of HSR is reducing travel time,
not just between the stations on the HSR route but also for any trip that can utilize HSR.
Using the multinomial logit probability function, the consumer chooses his travel mode
after considering the generalized cost, which consists of travel time cost and monetary cost.

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Table 3 Model calibrated gross product (GP) (billion, ¥)

GP of tourism goods GP of tourism goods GP GP(final GP (total)
(tourist departures) (tourist arrivals) (endogenous demand
sectors) sector)

Fukuoka 912 485 34,075 18,726 52,801

Saga 30 69 5074 3477 8551
Nagasaki 158 254 7683 3592 11,275
Kumamoto 216 256 10,440 8389 18,828
Oita 189 278 9252 5045 14,297
Miyazaki 78 57 6579 5135 11,715
Kagoshima 164 152 9596 6840 16,436
Japan 23,612 20,549 1,043,001 533,480 1,576,480
Kyushu 1748 1551 82,699 51,204 133,902

Consumer’s utility maximization problem

A consumer chooses consumption goods to maximize utility. Consumption goods are

categorized as daily goods, housing space, tourism goods, and leisure time. Tourism goods
are purchased in each prefecture z (z = 1,…,47 prefectures). Consumer’s choice is con-
ditional on the discrete choices of his/her work or non-work situation (e = 1 for work,
e = 2 for non-work), job location (j = 1,..,47 prefectures), residential location (i = 1,..,47
prefectures), and housing type (k = 1 for single-family housing and k = 2 for condo-
minium). The consumer’s utility is defined as a constant elasticity of substitution (CES)
utility function.
0 0 !rgi 1 1
1 @ ri X g
i

Ueijk ¼ ln ai Xjeijk þ bi Brjeijk

i
þ @ji iiz Zzjieijk A þ vi Heijk
ri A
ð1Þ
ri z

where Xeijk is daily consumption, Bjeijk is housing space, Zzjeijk refers to tourism goods
purchases in prefecture z, and Heijk refers to leisure time. Consumers purchase daily goods
only in the residential prefecture, and they can purchase tourism goods in all prefectures
including their residential prefecture. The composite tourism goods shape the CES sub-
utility function. 0 \ ri \ 1 and 0 \ gi \ 1 are parameters of the CES utility functions. The
elasticity of substitution among the consumer’s consumption goods and tourism goods is
given by 1/(1 - ri) and 1/(1 - gi), respectively. ai ; bi ; ji ; vi and iiz are constant weights.
The budget constraint is given as follows.
X
wij ¼ wij Xjeijk þ rik Bjeijk þ uijz Zzjeijk þ wj Hjeijk ð2Þ

where wij and uijz are the full prices of the daily goods and tourism goods, respectively.
Full prices include the generalized travel cost. rik is rent. We assume that all consumers pay
housing rent. wj is the wage rate and also a value of time. The time constraint is given as
follows. Since we assume non-wage income, non-workers also have a positive budget.
X

HdG ij Ci Xjeijk Gii  fiz Zzjeijk Giz Heijk  0 ð3Þ

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684 Transportation (2018) 45:677–701

where H is the time commonly available to all consumers, and d refers to a given annual
work day for labor. d = 0 for non-workers. Gij , Gii and Giz refer to the travel time for
commuting, shopping daily goods and tourism goods, respectively. Ci and fiz are the
frequency of trips for a unit of daily goods and tourism goods, respectively. The equation is
positive on account of labor supply (i.e., labor hours).
By solving this problem and substituting consumption goods demand into the utility
function, we derive the indirect function conditional on the work or non-work situation,
residential location, job location, and housing types (e, i, j, and k, respectively). Then,
knowing the indirect utility, consumers choose these discrete choices following the nested
multinomial logit model, where the three layers of the nests are the work or non-work type,
PEe job location for labor, PJjje and residential location or housing type, PRikjj .

Decomposition of tourism goods demand

For consumers facing the conditions of work or non-work, residential location, job loca-
tion, and housing (e, i, j, and k, respectively), the consumption of tourism goods in
prefecture z, Zzjeijk , is given as follows.
1 ri 1 g

j1r
i u
i
^riki 1 i1g
iz uiz
g1
1
Zzjeijk ¼ Wij 1 ri 1 ri 1 ri 1 ri
P 1g g1
1 g
|{z} 1ri ri 1 1ri ri 1 1ri ri 1 1ri ri 1
iiz uiz uiz
a
A: Budget: i
wi þ bi rik þ ji u^ik þ vi wj |{z}
|fflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl} z
B: Share of composite tourism goods in budget:
|fflfflfflfflfflffl{zfflfflfflfflfflffl} D: Divison by full price
of tourism goods:
C: Share of tourism goods
of destination z in budget
for composite tourism goods:

ð4Þ
where u^ik is a price of composite tourism goods. In this equation,Wij (part A) refers to the
budget. Part B is the share of the entire composite tourism goods budget in the overall
budget. Part C denotes the share of the tourism budget of destination z within the entire
composite tourism budget. Part D refers to the division by full price of tourism goods.
Thus, the tourism budget with prefecture z as the destination, divided by the full price of
tourism goods, becomes the tourism goods demand of each consumer. The tourism goods
demand for each region is calculated as follows.
X
ZZDEMAND ¼ NPEe Pjjje PRikj j Zz eijk ð5Þ
eijk
P
where N is the adult population in the country, and Neijk ¼ NPEe Pjjje PRikj j refers to the
eijk
population that chooses discrete choice combinations (e, i, j, and k, respectively).
If travel time decreases only in one origin–destination pair (i–z) and other things
remaining constant, the following general effects would occur in the prefecture. The full
price of tourism goods, uiz , will decrease. Part D increases. The share of tourism goods for
region z within the tourism goods budget (Part C) increases. Additionally, the price of
composite tourism goods, u^ik , will decrease. As a result, the share of tourism goods budget
in the total budget (part B) increases. The labor budget, wij (part A), increases because the
decreased travel time increases labor hours. Consequently, the consumer’s tourism goods
demand in prefecture z, Zzjeijk , will increase. An increase in ri and gi will increase part B
and part C, respectively, when travel time decreases. The change in Zzjeijk will also be
larger. Since travel time decreases only between prefectures i and z, the indirect utility in

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prefecture i increases. This may cause an indirect increase in the indirect utility of pre-
fecture z, as the population in i would increase (however, this is ambiguous; on the one
hand, it increases since indirect utility increases; on the other hand, it can decrease since
prefecture i could become more attractive as a travel destination than prefecture z). Thus, it
is expected that ZzDEMAND will increase. Note the assumption that the travel time decreases
only between one origin–destination pair (i–z) is not realistic. In reality, such time
reduction causes a reduction in travel time between the other origin–destination (o–d) pair
as well. Consumers make their choices after considering the relative travel time reduction
among prefectures. Furthermore, if the time reduction occurs not only between the active
o–d pair but also between the non-active o–d pair, then ZzDEMAND can decrease. This is
because if Zzjeijk is small and the demand for some other tourism goods in z is large, the
change in the population could potentially reduce ZzDEMAND .

Trips

The number of consumer trips, Toij , between i and j for purpose o (o = 1 for work trips for
commute, o = 2 for daily non-work trips for shop, and o = 3 for tourism trips) are cal-
culated from the derived variables. The annual round work trip is T1ij ¼ dN ij , where N ij is
the working population of pair (i–j), that is the summation of Neijk workers over k. The
P
annual daily non-work trips are T2ii ¼ ejk ci Neijk Xjeijk , where ci is the frequency for unit
of daily goods, Neijk is the population of different types, and Xjeijk is the daily goods
P
demand. The annual tourism trip is T3iz ¼ ejk fiz Neijk Zzjeijk , where fiz is the frequency for
unit tourism goods and Zzjeijk is the tourism goods demand. T3iz is the number of tourists in
this study. Combined with mode choice probabilities, the number of trips by different
modes cab be derived.

Producer’s behavior

The producers are the basic industries (primary industry, secondary industry, and tertiary
industry), the developer (construction industry), and final demand goods industry. Pro-
ducers minimize their cost.
To produce the output of basic industries, producers of basic industries r in prefecture j
use intermediate goods from basic industries, s, of other prefectures, n, as the input, labor
force, producer’s building space (farm land, factory, and office), and capital. The cost
function is given as follows.
!
X
nsnrj Ysnrj þ wj Lrj þ rrj Brj þ qKrj ð6Þ
sn

where Ysnrj are the intermediate input goods, Lrj is the labor input, Brj refers to office space,
and Krj denotes capital input. nsnrj denotes the delivered price of intermediate input goods,
which includes mill price and transportation cost, while wj and rrj are the wage rate and
office rent, respectively. q is an exogenous constant interest rate that is common among
regions and industries.
The CES production function is given as follows. The intermediate input goods also
take the CES sub-production function.

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686 Transportation (2018) 45:677–701

0 0 1n1
!e1 1nr r

B X r

Xrj ¼ A^rj @crj @ er

tsnrj Ysnrj A þ drj Lnr þ lrj Bnr þ vrj K nr C ð7Þ
rj rj rj A
sn
rj

where 0 \ nr \ 1 and 0 \ er \ 1 are the parameters of the CES production functions. The
elasticity of substitution among the producer’s inputs and the intermediate input goods is
given by 1/(1 – nr) and 1/(1 – er), respectively. A^rj denotes productivity, and crj ; drj ; lrj ; vrj
and tsnrj are constant weights.
Developers in the construction industry construct buildings using empty spaces and
demolish old buildings to create empty space. The building types are empty space, resi-
dential housing, residential condominiums, land for primary industry, buildings for sec-
ondary industry, and buildings for tertiary industries. Developers decide output levels by
multinomial-logit functions that account for building and land values. In addition to
constructing the buildings, developers also behave as landlords. They may rent out their
housing/producer’s building space to residents and producers.
In the production function of final demand goods, the coefficients of intermediate input
goods crj and tsnrj are non-negative and those of other inputs, drj , lrj ; and mrj are zeros in
Eq. (7). In other words, the final demand goods are produced only from intermediate goods
and never from labor, buildings, and capital.

General equilibrium

Consumers consider daily goods and tourism goods differently. However, the final demand
goods producer considers them as one and the same final demand goods. In the equilibrium
of the goods market, the supply of final demand goods and the sum of daily goods demand
and tourism goods demand are consistent. The supply of basic industries in each prefecture
is consistent with the total intermediate goods demand of the industries and prefectures. In
the land market, the supply of floor space for the developer is consistent with the demand
for housing/producer’s buildings from consumers and producers. In the labor market, the
total supply of labor by the consumers from different prefectures is consistent with the total
labor demand of the producers in a prefecture.

Data

We simulate the Japanese economy for the year 2010 using the following data or refer-
ences for calibration. Data concerning the origin and destination prefecture pair trips, travel
mode, travel time, and monetary cost are obtained from ‘‘Zenkoku kansen ryokaku jun
ryudo chousa 2010 (Exploration of arterial passenger net flow for Japan 2010)’’ (Ministry
of Land Infrastructure, Transport and Tourism 2010). Prefectural data concerning job
locations and residential locations are sourced from ‘‘Kokusei chousa 2010 (Census 2010)’’
(Statistics Bureau 2010c). Data on consumer behavior, including travel behavior, are
sourced from ‘‘Kakei chousa 2010 (Household account 2010)’’ (Statistics Bureau 2011)
and ‘‘Ryokou kankou shouhi doukou chousa (An analysis of consumption trends in travel/
sightseeing)’’ (Japan Tourism Agency 2010). Data pertaining to land use are sourced from
‘‘Nihon toukei nenkan (Japanese annual statistics)’’ (Statistics Bureau 2010d), ‘‘Jutaku
tochi toukei chousa 2008 (Housing/land annual statistics 2008)’’ (Statistics Bureau 2010b),
and ‘‘Houjin tochi kihon chousa 2008 (Basic analysis of corporate land 2008)’’ (Statistics

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Bureau 2010a). Data regarding the producer’s behavior are sourced from the input–output
tables of the prefectures.

Simulation

The 47 prefectures are connected by transportation networks of five modes. In the simu-
lation analysis, it is assumed that the Kagoshima route of the Kyushu HSR reduces travel
time by rail between Fukuoka and Kagoshima by 1 h, and the opening of the Nagasaki
route of the Kyushu HSR will reduce the travel time by rail between Fukuoka and
Nagasaki by 30 min. Fukuoka, Kumamoto, and Kagoshima are the HSR stations along the
Kagoshima route, while Fukuoka, Saga, and Nagasaki are the HSR stations along the
Nagasaki route. Note that Kagoshima is terminal and Kumamoto is intermediate prefecture
of the Kagoshima route. Nagasaki is terminal and Saga is intermediate prefecture of
Nagasaki route. Fukuoka is the terminal prefecture for both Kagoshima and Nagasaki
route. It is also possible to interpret that Fukuoka as an intermediate prefecture between
Kagoshima route, the Nagasaki route and Sanyo HSR.
To make the simulation result as realistic as possible, the calibrations of elasticities use
information from studies set in Japan. We refer to Koike (2011) for transportation choice,
Asada and Takuma (2013), Ota and Okusa (1996), and Araki (2015) for consumer
behavior, and Nakamura (1994a, b) for land use. Moriizumi (1992) points out that there is a
large range of elasticities pertaining to housing supply.

Number of tourists

The Kagoshima HSR route

Table 4 provides details about the changes and percent changes in the number of tourists
by all modes after the inauguration of the Kagoshima route. The largest percent change for
the Kagoshima route is observed in Kagoshima, where the number of arriving tourists
increased by 4.49% (212,045 tourists). The breakdown of arriving tourists shows an
important difference between the changes in tourist arrivals from within the same pre-
fecture and from other prefectures. That is, we see a reduction in the number of tourists
from the same prefecture (-4.02% or 82,879 fewer tourists) and an increase in tourists
from outside the prefecture (11.11% or 294,924 tourists). While Kagoshima becomes a
more attractive destination for people of other prefectures (owing to the shorter travel
time), conversely, people within Kagoshima also find it easier to travel outside the pre-
fecture for the same reason. This is confirmed by the increase in tourist departures from
Kagoshima (0.38% or 17,301 tourists). Simultaneously, tourist arrivals from within the
prefecture decreased, and, thus, the share of tourist departures to other prefectures
increased. The former exceed the latter in this case, and the number of tourist arrivals
increased overall. If the regional difference is significant, and one prefecture has a larger
share of population (we call this an ‘‘over-concentrated’’ prefecture), the latter effect will
be stronger than the former. This is because the reduction in the number of departing
tourists from this prefecture to the other prefectures will be large when there is a small
reduction in the corresponding percentage. On the other hand, the increment in the number
of tourist arrivals from other ‘‘depopulated’’ prefectures to this over-concentrated

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Table 4 Changes in the number of tourists (person) by all modes and percentage changes when the Kagoshima HSR route functions
Adult population Tourist arrivals Tourist departures

Total Within the prefecture From other prefectures Total

Fukuoka 4172 (0.10%) 210,171 (1.31%) -87,469 (-1.92%) 297,640 (2.59%) -74,796 (-0.31%)
Saga -863 (-0.12%) -2446 (-0.10%) 0 (0.00%) -2446 (-0.10%) 5215 (0.36%)
Nagasaki -96 (-0.01%) -13,493 (-0.18%) -22,822 (-1.30%) 9329 (0.16%) -11,500 (-0.21%)
Kumamoto 2680 (0.17%) -327,507 (-3.47%) 3023 (0.15%) -330,531 (-4.44%) 14,344 (0.24%)
Oita -115 (-0.01%) 92,265 (0.92%) -56,988 (-2.09%) 149,254 (2.04%) 7630 (0.12%)
Miyazaki -65 (-0.01%) -3474 (-0.14%) -25,660 (-2.44%) 22,186 (1.64%) -11,681 (-0.38%)
Kagoshima 2351 (0.16%) 212,045 (4.49 %) -82,879 (-4.02%) 294,924 (11.11%) 17,301 (0.38%)
Japan 0 (0.00%) -133,072 (-0.02%) -320,126 (-0.22%) 187,054 (0.04%) -133,072 (-0.02%)
Kyushu 8063 (0.07%) 167,562 (0.32%) -272,795 (-1.93%) 440,356 (1.14%) -53,485 (-0.11%)
Transportation (2018) 45:677–701
Transportation (2018) 45:677–701 689

prefecture would be relatively small even if there were large increments in the corre-
sponding percentages.
Fukuoka also enjoys an increase in the number of arriving tourists (1.31% or 210,171
tourists). The breakdown shows that the number of tourists arriving from the same pre-
fecture decreased (-1.92% or 87,469 fewer tourists) while those arriving from other
prefectures increased (2.59% or 297,640 tourists). The departing tourists decreased
(-0.31% or 74,796 fewer tourists). Note that both Kagoshima and Fukuoka are terminal
prefectures of the Kagoshima route.
Kumamoto serves as an intermediate prefecture for the Kagoshima route. Therefore,
Kumamoto is also directly impacted by the HSR, and we can expect an increase in the
number of tourists. The results show that the HSR has impacted this prefecture negatively.
The number of arriving tourists decreased (-3.47% or 327,507 fewer tourists). The
breakdown shows that the number of tourists from within the prefecture increased (0.15%
or 3023 tourists), while the number of arriving tourists from other prefectures recorded an
undesirable decrease (-4.44 % or 330,531 fewer tourists). The number of departing
tourists increased (0.24% or 14,344 tourists). Here is an explanation why the number of
arriving tourists decreases. One important reason for some of these tourists previously
came to Kumamoto is because it served as a crossover point of prefectures, and the travel
time was reasonable from their origin prefectures without the HSR. With the functioning of
the HSR, travel time reduced further. For the tourists from Fukuoka, for example, the
reduction in travel time due to the HSR between Fukuoka and Kagoshima is greater than
that between Fukuoka and Kumamoto. As a result, previously, tourists proceeding from
Fukuoka to Kumamoto could switch destinations at Kagoshima. The same applied to
tourists from Kagoshima and other prefectures. This negatively impacts the prefectures that
serve as intermediate HSR stations. Assuming other conditions are the same, the travel
time from the intermediate prefectures to most other prefectures decreased. On the other
hand, the reduction in travel time from the terminal prefecture to the intermediate one is
not as large as that between two terminal prefectures.
Oita showed gains in the number of tourists, even though the HSR does not serve this
prefecture. The number of arriving tourists increased (0.92% or 92,265 tourists). The
breakdown shows that the arriving tourists from within the prefecture decreased (-2.09%
or 56,988 fewer tourists) and that from other prefectures increased (2.04% or 149,254
tourists). Traditionally, Oita is a popular tourist destination. An increase in the total
number of trips would benefit Oita. Actually, the number of tourists arriving at Kyushu
increased, although the number of tourists for Japan as a whole decreased. Another element
of concern is the population. If the population of a prefecture increases, the number of
departing tourists from that prefecture would also increase. If the population of a prefecture
that provides a large number of departing tourists to Oita increases, we can expect to
observe an increase in the number of tourists arriving at Oita. These elements appear to
have helped Oita’s gains. In fact, the populations of Fukuoka, Kumamoto, and Kagoshima
increased, and we observe a subsequent increase in the number of tourists arriving at Oita
from these prefectures. It is also important to note that the number of tourists departing
from Oita increased (0.12% or 7630 tourists). Even if Oita does not have an HSR, it is
possible for tourists from Oita to Kagoshima, for example, to use the HSR between
Fukuoka and Kagoshima. This is, in fact, true for the tourists arriving at Oita. Therefore,
although the HSR does not serve Oita directly, tourists can utilize it to travel to this
prefecture.
The other prefectures, namely Saga, Nagasaki, and Miyazaki, witnessed a drop in the
number of arriving tourists, but these impacts were moderate. Considering Japan as a

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whole and Kyushu, the share of arriving tourists decreased (-0.02% or 133,072 fewer
tourists) and increased (0.32% or 167,562 tourists), respectively. The increment of a long-
distance costly tourism trip to Kyushu is substituted to the short distance tourism trips from
Japan. Incidentally, the frequency of tourism trips per person also affects the total number
of tourists. If opportunities for expensive tourism trips (such as long-distance ones)
increase, it is possible to see a drop in the number of short-distance and cheap tourism trip.
As a result, the total number of tourism trips could reduce.

When both routes (Kagoshima and Nagasaki) function

If both the Kagoshima and Nagasaki routes function, the HSR would run along the
Fukuoka–Saga–Nagasaki route in addition to the Fukuoka–Kumamoto–Kagoshima route.
Nagasaki and Kagoshima serve as the terminal prefectures, and Kumamoto, Saga, and
Fukuoka are the intermediate prefectures.
Table 5 compares the details of the number of tourists by all modes after both routes
start functioning against the base setting (where neither route functions). The population
increment in Fukuoka is less than that when only the Kagoshima route functions. The
largest negative percent change in the number of tourist arrivals after both routes start
functioning is observed for Saga (-7.21% or 177,085 fewer tourists). Note that Saga is an
intermediate prefecture. The positive effect of reducing travel time for tourists traveling to
Saga is weaker than that for Nagasaki, the terminal station. Conversely, the change in the
number of tourists arriving at Nagasaki is positive (3.76% or 287,261 tourists). This is a
considerable contrast, since Nagasaki loses tourist arrivals when only the Kagoshima route
functions (-0.18% or 13,493 fewer tourists).
Compared to the case when only the Kagoshima route functions, the impacts on tourist
arrivals at Kumamoto and Kagoshima are from -3.47% (327,507 fewer tourists) to
-3.84% (362,196 fewer tourists), and from 4.49% (212,045 tourists) to 4.44% (209,233
tourists), respectively. Since more prefectures will be served by the HSR when both routes
function, the advantages currently enjoyed by the prefectures along the Kagoshima route
will be partially lost. Fukuoka will become an intermediate prefecture for both routes,
although it serves as the terminal prefecture for the Kagoshima route. Even so, Fukuoka
still attracts tourists (arrivals increased by 2.08% or 333,267 tourists). Fukuoka might work
as intersection of two routes in Kyushu HSR and Sanyo HSR. The breakdown shows that
the number of tourists from the same prefecture decreases (-2.08 or 94,804 fewer tourists),
while there is an increase in the number of tourists arriving from other prefectures (3.73%
or 428,071 tourists). Even the intermediate station, if the prefecture itself is popular for
tourists, can attract more tourists.
The impacts of the functioning of both HSR routes on Oita and Miyazaki, where HSR
does not achieve, are relatively moderate, but the number of tourist arrivals decreases
compared to when only the Kagoshima route functions.

Gross product of tourism goods and regional economy

When only the Kagoshima HSR route functions

Table 6 shows changes in monetary terms and percent changes of the GPs when the
Kagoshima route functions. The GP of arrival tourism goods is the expenditure for tourism
goods of the tourist arrivals at the destination prefecture. Note that demand (or expendi-
ture) and supply (or product) are equal at equilibrium. The GP of departure tourism goods

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 Table 5 Changes in the number of tourists (person) by all modes and percentage change when both HSR routes (Kagoshima and Nagasaki) function
Adult population Tourist arrivals Tourist departures
Transportation (2018) 45:677–701

Total Within the prefecture From other prefectures Total

Fukuoka 3942 (0.09%) 333,267 (2.08%) -94,804 (-2.08%) 428,071 (3.73%) -63,222 (-0.26%)
Saga -89 (-0.01%) -177,085 (-7.21%) 0 (0.00%) -177,085 (-7.21%) 2313 (0.16%)
Nagasaki 748 (0.06%) 287,261 (3.76%) 37,447 (2.13%) 249,814 (4.24%) 39,514 (0.71%)
Kumamoto 2453 (0.16%) -362,196 (-3.84%) 4588 (0.23%) -366,784 (-4.93%) 13,310 (0.22%)
Oita -96 (-0.01%) 14,604 (0.15%) -62,836 (-2.30%) 77,439 (1.06%) 7913 (0.13%)
Miyazaki -76 (-0.01%) -8818 (-0.37%) -26,364 (-2.50%) 17,546 (1.30%) -11,931 (-0.39%)
Kagoshima 2129 (0.15%) 209,233 (4.44%) -80,927 (-3.92%) 290,160 (10.93%) 17,592 (0.38 %)
Japan 0 (0.00 %) -164,778 (-0.03%) -326,071 (-0.22%) 161,293 (0.04%) -164,778 (-0.03%)
Kyushu 9012 (0.08%) 296,266 (0.56%) -222,895 (-1.57%) 519,161 (1.35%) 5490 (0.01%)
691

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Table 6 Changes (million, ¥) and percent changes in expenditure for tourism goods and GP when only the Kagoshima route functions
GP of tourism goods (tourist GP of tourism goods(tourist GP of the endogenous sector GP of the final demand sector GP (total)
arrivals) departures) (A) (B) (A) ? (B)

Fukuoka 9672 (1.74%) 1,920 (0.21%) 148,892 (0.44 %) 189,758 (1.01%) 338,650 (0.64%)
Saga -344 (-0.50%) -46 (-0.15%) 1876 (0.04%) 3764 (0.11%) 5639 (0.07%)
Nagasaki -145 (-0.05%) 18 (0.01%) 2635 (0.03%) 2633 (0.07%) 5269 (0.05%)
Kumamoto -7837 (-2.71%) 637 (0.30 %) 48,265 (0.46%) 91,129 (1.09%) 139,394 (0.74%)
Oita 3077 (0.92%) 26 (0.01%) 408 (0.00%) 346 (0.01%) 754 (0.01%)
Miyazaki 365 (0.54%) 17 (0.02%) 1936 (0.03%) 2771 (0.05%) 4707 (0.04%)
Kagoshi 16,839 (8.75%) 683 (0.42%) 52,827 (0.55%) 73,088 (1.07%) 125,915 (0.77%)
ma
Japan 1517 (0.01%) 1517 (0.01%) 477,676 (0.05%) 604,311 (0.11%) 1,081,986 (0.07%)
Kyushu 21,627 (1.21%) 3254 (0.19%) 256,839 (0.31%) 363,489 (0.71%) 620,328 (0.46%)
Transportation (2018) 45:677–701
Transportation (2018) 45:677–701 693

is the expenditure for tourism goods of tourist departures for the destination prefecture. The
GP for arrival tourism goods shows the same trend as that for the number of tourists,
namely, positive for Fukuoka (1.74% or ¥9672 million), Oita (0.92% or ¥3077 million),
and Kagoshima (8.75% or ¥16,839 million). However, Kumamoto records a reduction
(-2.71% or a loss of ¥7837 million). We see a positive correlation between the number of
tourist arrivals and the GP of arrival tourism goods. An increase in the number tourist
arrivals tends to raise the GP of arrival tourism goods. Overall, we see an increase in the
GP of arrival tourism goods for Kyushu (1.21% or ¥21,627 million).
The GP of departure tourism goods increases for most prefectures in Kyushu, the
exception being Saga (-0.15% or a loss of ¥46 million). In general, the percent changes in
the GP of departure tourism goods for Japan as a whole (0.01% or ¥1517 million) and
Kyushu (0.19% or ¥3254 million) are larger than that for tourist departures for Japan
(-0.02% or 133,072 fewer tourists) and Kyushu (-0.11% or 53,485 fewer tourists). In
other words, the expenditure per tour increases.
The GP of endogenous sectors refers to the total price of intermediate input goods of the
producers, and the GP of the final demand sector is the total price of the consumption and
tourism goods. The values for GP denoted in the last column of Tables 6 and 7 denote the
sum of the GPs of the endogenous sectors and the final demand sector. Table 6 shows the
changes in the GP in for Japan (¥1,081,986 million or 0.07%) and Kyushu
(¥620,328 million or 0.46%), and in the corresponding GPs of final goods for Japan
(¥604,311 million or 0.11%) and Kyushu (¥363,489 million or 0.71%) are larger than the
changes in the GP of arrival tourism goods for Japan (¥1517 million or 0.01%) and Kyushu
(¥21,627 million or 1.21%). This implies that the HSR affects the economy through
numerous channels. In the process of general equilibrium, the increment in the demand of a
specific industry and prefecture stimulates the input demand of industries, employment,
land use, and locations of economic activities, not only in that specific industry but also in
other industries and prefectures.
The GP of arrival tourism goods shows positive changes in the GP of final demand not
only for Japan as a whole and Kyushu, but also for prefectures with negative changes.
Fukuoka, Kumamoto, and Kagoshima, which are served by the HSR, show relatively large
changes in the GP of final demand (¥189,758 million or 1.01%, ¥91,129 million or 1.09%,
and ¥73,088 million or 1.07%, respectively). In terms of the price value, the changes in the
GPs are even larger than the changes in the GPs of final demand.

When both routes (Kagoshima and Nagasaki) function

A similar explanation could be applicable with regard to the basic economy when both
Kagoshima and Nagasaki routes function. The GP of arrival tourism goods increases for
Nagasaki, a terminal prefecture (4.88% or ¥13,721 million). Note that this value decreases
if the Kagoshima route alone functions (-0.05% or a loss of ¥145 million). On the other
hand, Saga, an intermediate prefecture, sees a decrease in the GP of arrival tourism goods
(-7.48% or a loss of ¥5165 million), and the degree of change is larger compared to when
only the Kagoshima route functions (-0.50% or a loss of ¥344 million). Fukuoka becomes
an intermediate prefecture if both routes function, but serves as a terminal station if only
the Kagoshima route functions. Even so, the findings still show a positive impact. The
impact on the GP of arrival tourism goods becomes more negative for Kumamoto and less
positive for Kagoshima compared to when only the Kagoshima route functions. Oita and
Miyazaki record decrease as the HSR does not serve these prefectures. The total GP
increases even for those prefectures for which the GP of arrival tourism goods decreases.

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Table 7 Changes (million, ¥) and percent changes in expenditure for tourism goods and GP when both (Kagoshima and Nagasaki) routes function
GP of tourism goods (tourist GP of tourism goods(tourist GP of the endogenous sector GP of the final demand sector GP (total)
arrivals) departures) (A) (B) (A) ? (B)

Fukuoka 13,222 (2.38%) 1384 (0.15%) 147,589 (0.43%) 224,425 (1.20%) 372,014 (0.70 %)
Saga -5165 (-7.48%) 19 (0.06%) 14,161 (0.28%) 26,733 (0.77%) 40,894 (0.48%)
Nagasaki 13,721 (4.88%) 224 (0.14%) 22,507 (0.29%) 28,736 (0.80%) 51,243 (0.45%)
Kumamoto -9368 (-3.25%) 473 (0.22%) 45,630 (0.44%) 109,213 (1.30%) 154,842 (0.82%)
Oita -422 (-0.13%) 42 (0.02%) 1322 (0.01%) 1833 (0.04%) 3155 (0.02%)
Miyazaki 59 (0.09%) 15 (0.02%) 1879 (0.03%) 3476 (0.07 %) 5355 (0.05%)
Kagoshima 16,369 (8.51%) 543 (0.33%) 48,172 (0.50%) 87,052 (1.27%) 135,224 (0.82%)
Japan 688 (0.00%) 688 (0.00%) 495,593 (0.05%) 767,528 (0.14%) 1,263,121 (0.08%)
Kyushu 28,416 (1.59%) 2699 (0.15%) 281,261 (0.34%) 481,467 (0.94%) 762,728 (0.57%)
Transportation (2018) 45:677–701
Transportation (2018) 45:677–701 695

Moreover, although we estimate decreased tourist departures for Japan and Kyushu, the GP
of departure tourism goods shows an increase.

Comparative statics

The parameters that affect the balance of goods purchases among tourism goods and
consumer goods are g in the CES sub-utility function and r in the CES utility function,
respectively. Because of the CES utility functions, the elasticity of substitution among
tourism goods is 1/(1 – g), and that of other consumption goods (composite tourism goods,
daily consumption goods, housing space, and leisure) is 1/(1 – r). In the base setting in
Sect. 5, we conduct the analysis for HSR using g = 0.9 and r = 0.1. In this section, we
conduct the simulation under a different situation, that is, by recalibrating with different g
and r. This establishes the plausibility of g and r. By reducing g from 0.9 to 0.1 in steps of
0.2, we decrease the elasticity of substitution among tourism goods. Under a smaller
elasticity of substitution, consumers are likely to change the consumption balance of
tourism goods, part C in Eq. (4), by a smaller extent when the full price of tourism goods
changes. By changing r from 0.1 to 0.9 in steps of 0.2, the elasticity of substitution among
consumption goods becomes larger. Consumers are likely to make larger changes to the
consumption balance of consumption goods, part B in Eq. (4), under a larger elasticity of
substitution when the prices change (or the price of composite tourism goods changes). We
analyze the effects of the functioning of both the Kagoshima and the Nagasaki HSR routes
in this section.
Figure 3a shows the percent change in tourist arrivals for 0.9 C g C 0.1, keeping r
constant. As g decreases and the elasticity of substitution among tourism goods decreases
as well, so do the percent changes. In Saga, for example, the percent change is around

(a) (b)

Fig. 3 a Percent changes in tourist arrivals for different g (keeping r = 0.1). The higher the g, the lower
the elasticity of substitution among tourism goods, 1/(1 – g). b Percent changes in tourist arrivals for
different r (keeping g = 0.9). The higher the r, the lower the elasticity of substitution among consumption
goods, 1/(1 – r)

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-7.2% when g = 0.9 and -0.3% when g = 0.1. As g reduces, consumers make fewer
changes to their destinations when the HSR functions.
Figure 3b shows the percent change in tourist arrivals for 0.1 B r B 0.9, keeping g
constant. As r becomes larger and the elasticity of substitution among consumption goods
becomes larger, the percent changes also rises. A typical example is Kagoshima, which
shows a percent change of about 4.4% when r = 0.1 and of about 11.3% when r = 0.9.
As r increases, consumers make larger changes in consumption goods as the travel cost
decreases. In other words, consumers will travel more when the HSR functions.
Figure 4a presents the percent changes in tourist departures for 0.9 C g C 0.1, keeping r
constant. As g as well as the elasticity of substitution among tourism goods decrease, the
percent change in tourist departures increases. The exceptions are Saga and Nagasaki.
Suppose the budget for tourism goods remains constant (i.e., we keep parts A and B of
Eq. (4) constant). When the HSR functions and the travel time decreases (price effect), the
increment (reduction) in the elasticity of substitution among tourism goods causes an
increment (reduction) in longer-distance and more expensive tours. The substitution effect
in tourism goods (i.e., the change in part C of Eq. (4)) causes a reduction in shorter-
distance and cheaper tours. The substitution effect is likely to exceed the price effect,
because more than one cheap tour must be canceled to compensate for one additional
expensive tour. Therefore, the number of trips decreases. Now, we relax the assumption
that the budget for tourism goods can change. The reduction in travel time also reduces the
full price of tourism goods, thus reducing the price of composite tourism goods. If the price
of composite tourism goods decreases, tourists would increase their budget for tourism
goods to the extent possible (i.e., the substitution effect of consumption goods explained by
the change in part B of Eq. (4)). This effect would increase the number of trips. There are
also other impacts caused by general equilibrium effects such as the change in the budget
(i.e., changes in part A of Eq. (4)) or the changes in the population (i.e., changes in PEe , PJjje

(a) (b)

Fig. 4 a Percent changes in tourist departures for different g (keeping r = 0.1). The higher the g, the lower
the elasticity of substitution among tourism goods, 1/(1 – g). b Percent changes in tourist departures for
different r (keeping g = 0.9). The higher the r, the lower the elasticity of substitution among consumption
goods, 1/(1 – r)

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Transportation (2018) 45:677–701 697

(a) (b)

Fig. 5 a Percent changes in the GP of arrival tourism goods for different g (r = 0.1), b Percent changes in
the GP of arrival tourism goods for different r (g = 0.9)

(a) (b)

Fig. 6 a Percent changes in the GP of final goods for different g (r = 0.1). b Percent changes in the GP of
final goods for different r (g = 0.9)

and PRikj j of Eq. (5)). As such, it is possible that a more elastic substitution in tourism goods
can cause either an increment or a reduction in tourist departures when the HSR functions.
Figure 4b shows the percent changes in tourist departures for 0.1 B r B 0.9, keeping g
constant. We assume that the other prices are constant and that the full prices of tourism
goods, as a whole, decrease when the HSR functions. Subsequently, when r and the
elasticity of substitution among consumption goods are large, consumer expenditure on
tourism goods increases and so does the number of tours. A typical example is Kagoshima.
Figures 5a, b show the percent change in the GP of arrival tourism goods for different g
and r, respectively. The behavior of the plots is similar to that for the percent change in
tourist arrivals.

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Figures 6a, b present the percent change in the GP of final demand goods for varying g
and r, respectively. The behavior of the plots is similar to that of the GP of arrival tourism
goods. We note that the impacts are moderate and positive even when the impacts on the
GP of arrival tourism goods are negative.

Conclusion

Many HSR routes are under construction in various cities of the world. Tourism is one of
the industries most affected by HSR. However, not much is known about the effects of
HSR on tourism. We studied these effects on tourism using CGE modeling in the context
of regional economies and transportation. CGE is an effective approach to analyze the
impact of HSR in terms of spillover effects across regions and industries. This paper
studied the case of Kyushu, which is composed of many prefectures of varying economic
well-being. As some of Kyushu’s prefectures serve as stations along the recently func-
tioning and planned HSR routes, we expected that such prefectures would see a rise in
tourism.
The results indicate that only some stations served by the Kyushu HSR will see a boost
in tourism. This would lead to regional inequality. For instance, our results show that some
of the prefectures of Kyushu will witness a decline in tourism, while others will benefit
from its increase. We analyzed the effects of the HSR for some routes, depending on
whether the prefecture is a served by the HSR or not, whether it is a terminal or an
intermediate HSR station, its current popularity with tourists, and the general effects of the
HSR. The general effects were tested by first considering the Kagoshima route alone and
then assessing the effects of both the Kagoshima and the Nagasaki routes. The findings
indicate that the tourism destination choices of consumers will be affected to a large extent
by the functioning of these HSR routes. Against expectations, we find that the HSR will
reduce tourist departures as a whole for both Japan and Kyushu. The added effects of the
longer travel distance to the destination and the expense of travel for consumers using the
HSR need to be compensated by reducing the travel distance and making tours cheaper.
Consumer behavior is an obvious factor affecting tourism in relation to the HSR. By
changing the elasticities of substitution in consumption goods and tourism goods, we could
observe the impact of the HSR on tourism.
We found that despite the inequalities experienced by the tourists, the economy of each
prefecture will benefit. This may be attributed to the general equilibrium effect; if a specific
industry of a prefecture grows, the other industries and prefectures are also stimulated
owing to spillover effects. Our results show that the tourism goods demand also decreases
in some prefectures, although the GPs of these prefectures increase, as well as the GPs for
Japan and Kyushu as a whole. This is because, as the general equilibrium process shows,
the HSR stimulates not only tourism but other industries as well. In summary, the direct
impact of investing in HSR would bring unequal regional impacts in the tourism industry.
The effects spill over to other industries in the broader areas and benefit the economy as a
whole.
A further direction of this study can be the improvement of the current model by
detailed analysis. First, the most insightful modification would be introducing the different
consumer types. That is, consumers could be categorized by income, age, sex, and foreign
visitors. Such a model could analyze which group the HSR benefits or how the different
groups behave. Second, to incorporate the producer’s business trip makes the model not

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Transportation (2018) 45:677–701 699

Table 8 The share (%) of travel modes for different purposes (weekday)
Rail Bus Automobile Two wheels Walk and others Total

Commute (work) 4.2 0.5 6.9 2.6 1.1 15.4

Commute (school) 1.0 0.2 0.6 1.2 3.4 6.3
Business 0.9 0.1 6.0 0.7 0.6 8.4
Return home 6.2 1.3 17.4 7.4 8.4 40.6
Personal 2.3 0.9 15.0 4.8 6.3 29.3
Total 14.6 2.9 45.9 16.7 19.8 100.0

Table 9 The share (%) of travel modes for different purposes (holiday)
Rail Bus Automobile Two wheels Walk and others Total

Commute (work) 0.7 0.1 2.0 0.7 0.3 3.9

Commute (school) 0.1 0.0 0.1 0.3 0.3 0.8
Business 0.2 0.0 1.8 0.3 0.3 2.7
Return home 3.4 0.8 24.1 5.7 6.3 40.3
Personal 4.0 0.9 33.6 5.8 8.1 52.3
Total 8.4 1.8 61.6 12.9 15.3 100.0

only interesting but also realistic and rigorous. The Appendix overviews data to establish
the importance of business trips.

Funding This work was supported by JSPS KAKENHI Grant Number 26870793.

Appendix: purposes and modes of trips

Generally, there is room for improvement in the economic modeling. The CGE model
validation against real world situations is one criticism (Dwyer 2015b). The modeling in
this paper also contains simplifications and leaves validity questions unanswered. One
important simplification are non-modeled business trips. As explained in Sect. 3.1.4, the
model in this paper considers trips, Toij , between i and j for purpose o (o = 1 for work trips
for commute, o = 2 for daily non-work trips for shop, and o = 3 for tourism trips). As
such, containing business trips in the model is future scope for research. In this appendix,
we identify data on business trips to realize the importance of expanding the model.
Tables 8 and 9 show the share of trips by different modes and purposes during week-
days and holidays, respectively, calculated from the data in ‘‘Zenkoku toshi kotsu tokusei
chosa, 2010 (Exploration of features in city transportation in Japan, 2010)’’ (Ministry of
Land Infrastructure, Transport and Tourism, 2010).6 The analysis results are estimated by

6
Ministry of Land, Infrastructure, Transport and Tourism (Traffic movement in cities) (in Japanese), http://
www.mlit.go.jp/toshi/city_plan/toshi_city_plan_tk_000007.html.

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700 Transportation (2018) 45:677–701

using weights from the data on 38,000 households from 70 cities and 60 assemblies. There
were 786 cities and 941 assemblies in Japan in 2010.7 The data includes inter-prefectural
travel. It is possible to consider that this data present the travel trend in Japan. The shares
of travel purposes during weekday (holiday) are 15.4% (3.9%) for commuting for work,
6.3% (0.8%) for commuting for school, 8.4% (2.7%) for business, 40.6% (40.3%) for
returning home and 29.3% (52.3%) for personal cases. In case of distributing the trips for
returning home, it is distributed to other purposes than business. The business trip by rail
accounts for 0.9% (0.2%).
Limiting the mode of transport to Kyushu HSR and calculating the share of purposes
from data in ‘‘Kyushu Shinkansen wo meguru jyokyo ni tuite (On the situation of Kyushu
Shinkansen)’’ (Ministry of Land Infrastructure, Transport and Tourism 2010),8 https://
wwwtb.mlit.go.jp/kyushu/gyoumu/kikaku/file35/siryo_01.pdf the share of purposes for
HSR use is 29.4% for business, 8.0% for commuting, and 62.8% for others, such as
returning to the home town and sightseeing. The importance of business trips and private
use in Kyushu HSR is higher than that for transportation in the entire country, while the
importance of commuting is not.

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Tomoru Hiramatsu is an Associate Professor at Kumamoto Gakuen University. He obtained his Masters of
International Public Policy from Osaka University and Ph.D. of Economics from State University of New
York at Buffalo. His research interests include regional, urban and transportation economics.

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