Cost Inefficiency of Municipalities after Amalgamation
AbstractThis paper focuses on the increase in slack costs due to municipality amalgamation, which is pushed forward in several countries to achieve economies of scale. Employing the stochastic frontier cost function to estimate the inefficiency of local public expenditure due to slack, this study investigated 479 Japanese municipalities that had amalgamated from 2000 to 2005. This work used the technical inefficiency variable “Number of municipalities that participated in an amalgamation” and a dummy variable for “The newly-established-municipality form of amalgamation.” Results show that these variables have an impact on the cost inefficiency of local public expenditure. Average efficiency scores in the two estimations carried out were 1.145 and 1.100. The estimation results showed that municipality amalgamation produces integration costs (slack) in an administrative organization. The degree of slack depends on the form of amalgamation.
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Bibliographic InfoPaper provided by Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung) in its series MAGKS Papers on Economics with number 201314.
Length: 12 pages
Date of creation: 2013
Date of revision:
Publication status: Forthcoming in
Municipality amalgamation; Cost inefficiency; Slack cost; Stacastic frontier analysis; Japan;
Find related papers by JEL classification:
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
- K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
- N00 - Economic History - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-23 (All new papers)
- NEP-EFF-2013-03-23 (Efficiency & Productivity)
- NEP-MAC-2013-03-23 (Macroeconomics)
- NEP-PBE-2013-03-23 (Public Economics)
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