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Inefficiency and Self-Determination: Simulation-based Evidence from Meiji Japan

Eric Weese (), Masayoshi Hayashi and Masashi Nishikawa
Additional contact information
Masashi Nishikawa: College of Economics, Aoyama Gakuin University

No CIRJE-F-989, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: We consider a model in which the arrangement of political boundaries involves a tradeoff between efficiencies of scale and geographic heterogeneity. If jurisdiction formation is decentralized, the model corresponds to a fractional hedonic game. We show how mixed integer programming can be used to calculate core partitions for fractional hedonic games via a sequence of myopic deviations. Using historical data from Japan regarding a set of centralized boundary changes, we estimate parameters using moment inequalities and find that core partitions always exist. In a counterfactual world in which there are no between-village income differences, these core partitions are extremely close to the partition that would be chosen by a utilitarian central planner. When actual cross-village income differences are used, however, sorting on income results in mergers that are both smaller and geographically bizarre.

New Economics Papers: this item is included in nep-cmp, nep-ger and nep-upt
Date: 2015-08
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http://www.cirje.e.u-tokyo.ac.jp/research/dp/2015/2015cf989.pdf (application/pdf)

Related works:
Working Paper: Inefficiency and Self-Determination: Simulation-based evidence from Meiji Japan (2016) Downloads
Working Paper: Inefficiency and Self-Determination: Simulation-Based Evidence From Meiji Japan (2015) Downloads
Working Paper: Inefficiency and Self-Determination: Simulation-Based Evidence From Meiji Japan (2015) Downloads
Working Paper: Inefficiency and Self-Determination: Simulation-based Evidence from Meiji Japan (2015) Downloads
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