Inefficiency and Self-Determination: Simulation-Based Evidence From Meiji Japan Report as inadecuate




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Does the exercise of the right of self-determination lead to inefficiency? This paper considers a set of centrally planned municipal mergers during the Meiji period, with data from Gifu prefecture. The observed merger pattern can be explained as a social optimum based on a very simple indiidual utility function. If individual villages had been allowed to choose their mergerpartners, counterfactual simulations show that the core is always non-empty, but core partitions contain about 80% more (post-merger) municipalities than the social optimum. Simulations are possible because core partitions can be calculated using repeated application of a mixed integer program.

Keywords: Municipal mergers ; one-sided matching ; moment inequalities ; mixed integer programming ; Gifu

Subject(s): Political Economy

Public Economics

Research Methods/ Statistical Methods

Issue Date: 2015-08

Publication Type: Working or Discussion Paper

PURL Identifier: http://purl.umn.edu/211545

Total Pages: 98

JEL Codes: C63; C71; H77; K33; N95

Series Statement: Economic Growth Center Discussion paper

1050

Record appears in: Yale University > Economic Growth Center > Center Discussion Papers





Author: Weese, Eric ; Hayashi, Masayoshi ; Nishikawa, Masashi

Source: http://ageconsearch.umn.edu/record/211545?ln=en







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