On the Applicability of the Tiebout Model to Japanese Cities

The purpose of this paper is to apply the so†called Tiebout hypothesis empirically to Japanese cities. 117 cities in the Tokyo metropolitan area and 72 cities in the Osaka metropolitan area are respectively classified into eight clusters using public expenditure densities as attribute variables. The land price of each city is then regressed on per capita income, population density and dummy variables corresponding to the clusters. High statistical significance of the estimated coefficients of the dummy variables can be taken meaningfulness of the initial classification of cities in which individuals of varying preference to the different patterns of public expenditures reside, Through this procedure, the authors reached the conclusion that the Tiebout hypothesis is applicable to cities in Japanese metropolitan areas.