Optimal size of central government and agglomeration

Akiyoshi Furukawa ()
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Akiyoshi Furukawa: Department of Economics, Chukyo University

Economics Bulletin, 2010, vol. 30, issue 2, 940-947

Abstract: Though the central government uses neither a transfer nor a regional allocation policy, it can affect the distribution of the population. This paper analyzes the optimal government policy and examines whether or not the government should take into account agglomeration without a regional redistribution policy. The optimal size of central government depends on the degree of increasing returns in the private and the public sector. When the central government shows a much lower degree of increasing returns in contrast to the private sector, it should decrease the provision of the public good. As a result, the central government limits agglomeration. If the central government does not consider its effect on agglomeration, it is too large in size, and it causes too much agglomeration.

Keywords: Agglomeration; Central government; Regional distribution (search for similar items in EconPapers)
JEL-codes: H4 R1 (search for similar items in EconPapers)
Date: 2010-04-01
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Citations: View citations in EconPapers (1)

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