The Impact of Highways on Commodity Prices: The Price of Butter in Japan

Discussion Papers

No.767

by Kazunobu Hayakawa and Kenmei Tsubota

March 2020

ABSTRACT

This study empirically investigates the effect of highways on retail prices of butter in Japan. We take into account the relocation of butter producers because of the development of highways. We found that highway construction increased transportation speed, but the average transportation time from the production site also increased dramatically due to the increase in transportation distance. The latter factor occurred because of the concentration of butter factories in limited regions. As a result, on average, the increase in transportation time during 1966–1980 raised the price of butter by 3.3%. While the increase in speed reduced the price by 2%, the increase in transportation distance increased it by 5.3%.

Keywords: Highways, Japan, Transportation Time

JEL classification: D04, H43, R42

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