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How the 30% Cap Reshapes Competition for Donations in Japan’s Furusato Nozei Program

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Listed:
  • Yusuke Makino

    (Graduate School of Economics, The University of Tokyo)

  • Hikaru Ogawa

    (Faculty of Economics, The University of Tokyo)

Abstract

Under Japan’s Furusato Nozei program, a 30% cap on return gifts was introduced to curb inter-municipal competition for donations. This paper analyzes the effects of the cap in a setting where municipalities compete not only through the value of return gifts subject to the regulation but also by employing other strategies to attract donors. The results show that while the cap suppresses gift-based competition, it may intensify competition through other channels, making overall outcomes ambiguous. The negative effects of introducing the 30% cap are more likely when donors value giving less, donations are less sensitive to gift return rates, or alternative strategies are highly effective.

Suggested Citation

  • Yusuke Makino & Hikaru Ogawa, 2025. "How the 30% Cap Reshapes Competition for Donations in Japan’s Furusato Nozei Program," CIRJE F-Series CIRJE-F-1258, CIRJE, Faculty of Economics, University of Tokyo.
    • Handle: RePEc:tky:fseres:2025cf1258
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    File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2025/2025cf1258.pdf
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    References listed on IDEAS

    as
    1. Fukasawa, Eiji & Fukasawa, Takeshi & Ogawa, Hikaru, 2020. "Intergovernmental competition for donations: The case of the Furusato Nozei program in Japan," Journal of Asian Economics, Elsevier, vol. 67(C).
    2. Yusuke Makino & Hikaru Ogawa, 2025. "Ending the race for return gifts: Do gift caps in the Furusato Nozei program work?," CIRJE F-Series CIRJE-F-1254, CIRJE, Faculty of Economics, University of Tokyo.
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