Economics at your fingertips  

Does municipal mergers internalize spatial spillover effects? Empirical evidence from Japanese municipalities

Hitoshi Saito (), Haruaki Hirota (), Hideo Yunoue and Miki Miyaki

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates whether municipal mergers could internalize spatial spillover effects by comparing mergers before and after they occur, especially focusing on local public library services in Japan. A spatial spillover effect occurs when the benefit of a local public service spreads across not only its own administrative district but also into neighboring ones. A free rider problem among municipalities might be caused when a municipality makes a policy decision regarding how much it supplies to its own local public service under a decentralization system, recognizing the existence of a spatial spillover effect. Under such circumstances, spatial spillover effects might be internalized through municipal mergers. In Japan, the boundaries of administrative districts—including those of municipalities—have been determined based on traditional or historical reasons. However, large-scale municipal mergers took place in FY2004 and FY2005 due to serious fiscal deficits and a rapidly aging population. Consequently, the number of municipalities in Japan has decreased from 3,232 to 1,820. In light of these facts, we examine whether municipal mergers internalize spatial spillover effects, focusing on Japanese local public library services, by applying cross-sectional spatial autoregressive models. As a result, we found that there are spatial spillover effects in public library services both in FY2001 (before) and in FY2008 (after). We also found that the impact of such spillovers in FY2008 is smaller than that in FY2001. The results imply that municipal mergers could at least partially internalize spatial spillover effects among municipalities.

Keywords: spatial spillover effect; municipal mergers (search for similar items in EconPapers)
JEL-codes: H70 H75 H77 (search for similar items in EconPapers)
Date: 2017-02-14
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().

Page updated 2021-11-23
Handle: RePEc:pra:mprapa:76833