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Political Mergers as Coalition Formation : Evidence from Japanese Municipal Amalgamations

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  • Weese, Eric
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    Abstract

    Political coalition formation games can describe the formation and dissolution of nations, as well as the creation of coalition governments, the establishment of political parties, and other similar phenomena. These games have been studied from a theoretical perspective, but the models have not been used extensively in empirical work. This paper presents a method of estimating political coalition formation models with many-player coalitions, and then applies this method to the recent heisei municipal amalgamations in Japan to estimate structural coeffients that describe the behaviour of municipalities. The method enables counterfactual analysis, which in the Japanese case shows that the national government could increase welfare via a counter-intuitive policy involving transfers to richer municipalities conditional on their participation in a merger.

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    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/16353/5/070ccesDP_005.pdf
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    Bibliographic Info

    Paper provided by Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University in its series CCES Discussion Paper Series with number 5.

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    Length: 39 p.
    Date of creation: Dec 2008
    Date of revision:
    Handle: RePEc:hit:ccesdp:5

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    Keywords: Coalition Formation; Municipal Mergers; Japan;

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    1. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2008. "Coalition Formation in Non-Democracies," Review of Economic Studies, Oxford University Press, vol. 75(4), pages 987-1009.
    2. Tayfun Sönmez & Suryapratim Banerjee & Hideo Konishi, 2001. "Core in a simple coalition formation game," Social Choice and Welfare, Springer, vol. 18(1), pages 135-153.
    3. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2012. "Dynamics and Stability of Constitutions, Coalitions, and Clubs," American Economic Review, American Economic Association, vol. 102(4), pages 1446-76, June.
    4. Alesina, Alberto & Spolaore, Enrico, 1997. "On the Number and Size of Nations," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1027-56, November.
    5. Diamantoudi, Effrosyni & Xue, Licun, 2007. "Coalitions, agreements and efficiency," Journal of Economic Theory, Elsevier, vol. 136(1), pages 105-125, September.
    6. Dreze, J H & Greenberg, J, 1980. "Hedonic Coalitions: Optimality and Stability," Econometrica, Econometric Society, vol. 48(4), pages 987-1003, May.
    7. Ray, Debraj & Vohra, Rajiv, 1997. "Equilibrium Binding Agreements," Journal of Economic Theory, Elsevier, vol. 73(1), pages 30-78, March.
    8. John Vickers & Mark Armstrong, 2007. "A Model of Delegated Project Choice With Application to Merger Policy," Economics Series Working Papers 347, University of Oxford, Department of Economics.
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    Cited by:
    1. Eric Weese, 2011. "Political Mergers as Coalition Formation," Working Papers 997, Economic Growth Center, Yale University.

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