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

Author

Listed:
  • Eric Weese

    (Department of Economics, Yale University)

  • Masayoshi Hayashi

    (Department of Economics, University of Tokyo)

  • Masashi Nishikawa

    (Department of Economics, Aoyama Gakuin University)

Abstract

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 individual utility function. If individual villages had been allowed to choose their merger partners, counterfactual simulations show that the core is always non-empty, but core partitions contain about 80% more (postmerger) municipalities than the social optimum. Simulations are possible because core partitions can be calculated using repeated application of a mixed integer program.

Suggested Citation

  • Eric Weese & Masayoshi Hayashi & Masashi Nishikawa, 2015. "Inefficiency and Self-Determination: Simulation-based Evidence from Meiji Japan," Discussion Paper Series DP2015-35, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2015-35
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    Cited by:

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    2. Masayoshi Hayashi & Takafumi Suzuki, 2018. "Municipal Mergers and Capitalization: Evaluating the Heisei Territorial Reform in Japan," CIRJE F-Series CIRJE-F-1105, CIRJE, Faculty of Economics, University of Tokyo.
    3. Eric Weese, 2016. "European Political Boundaries as the Outcome of a Self-Organizing Process," Discussion Papers 1629, Graduate School of Economics, Kobe University.

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    More about this item

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • N95 - Economic History - - Regional and Urban History - - - Asia including Middle East

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