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

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 merger partners, 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.


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 created 2017-04-01, last modified 2017-04-26

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