Where an industry first lands is sometimes an accident; once it lands, staying is cheaper than leaving, so it stays.
The video builds the intuition; sources and limits are set out in the article. English- and Japanese-captioned versions of the vertical film are still on the to-do list.
More than 80% of America’s tufted carpet is made around the small town of Dalton, Georgia. The traditional story is that around 1895 a fifteen-year-old named Catherine tufted a bedspread as a wedding gift, neighbours wanted one, farm households began making them at home, and local mechanics later adapted machines for tufting. A century and more later, why are the carpet mills still clustered there?
Take two small towns’ plant accounts (a plant costs 4; shipping one unit across costs 1):
- With plants and workers in the east, the east buys 7 units and the west 3. One plant in the east ships 3 units west: 7 in all, plant included. Plants on both sides cost 8, and moving to the west costs more (11). So the plant stays east.
- If each town starts with a plant, each buys 5. Keeping only one costs 4 plus 5, 9, more than two plants at 8, so both stay.
- At the same freight cost, one plant or two depends entirely on the start. The outcome is set by the starting point: lock-in.
- Stranger still, moving plants and workers to one side would cost only 7, less than 8, but whoever closes first loses, so 8 keeps being paid. The locked-in pattern need not be the cheapest (only plant and freight costs are counted).
Germany shows an accident fixing a pattern too. In 1937 about 40% of German airport passengers went through Berlin. After the war Berlin was stranded in the east, the US military chose unremarkable Frankfurt as the European terminus of its air routes, and forty years later Frankfurt had nearly 40% and Berlin under 10%; a decade and more after reunification the hub had not moved back.
Japan is the counter-example: cities heavily bombed in the war regained their typical share of the national urban system within about fifteen years, Hiroshima taking about half as long again. The two do not contradict each other: lock-in concerns where an industry first lands, while a grown city is hard to erase even by bombing; moving a grown pattern takes a shock as severe and lasting as Germany’s division. Fukui’s eyeglass frames (over 90% of Japan’s domestic output) and Imabari’s towels are also industries that began by chance and stayed.
Japanese classroom version (16:9)
A slower Japanese 16:9 version paced for a lecture, in two parts, with the full derivation, worked numbers and review questions.
Sources: New Georgia Encyclopedia; Patton (EH.Net); Krugman (1991); Redding, Sturm and Wolf (2011); Davis and Weinstein (2002); METI industrial statistics; Imabari Towel Industrial Association. The numerical example follows Krugman’s simplified model with illustrative numbers.