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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

    (Faculty of Economics, The University of Tokyo)

  • Masashi Nishikawa

    (College of Economics, Aoyama Gakuin University)

Abstract

We consider a model in which the arrangement of political boundaries involves a tradeoff between efficiencies of scale and geographic heterogeneity. If jurisdiction formation is decentralized, the model corresponds to a fractional hedonic game. We show how mixed integer programming can be used to calculate core partitions for fractional hedonic games via a sequence of myopic deviations. Using historical data from Japan regarding a set of centralized boundary changes, we estimate parameters using moment inequalities and find that core partitions always exist. In a counterfactual world in which there are no between-village income differences, these core partitions are extremely close to the partition that would be chosen by a utilitarian central planner. When actual cross-village income differences are used, however, sorting on income results in mergers that are both smaller and geographically bizarre.

Suggested Citation

  • Eric Weese & Masayoshi Hayashi & Masashi Nishikawa, 2015. "Inefficiency and Self-Determination: Simulation-based Evidence from Meiji Japan," CIRJE F-Series CIRJE-F-989, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2015cf989
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2015/2015cf989.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Eric Weese, 2016. "European Political Boundaries as the Outcome of a Self-Organizing Process," Discussion Papers 1629, Graduate School of Economics, Kobe University.

    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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