Journal
INTERNATIONAL CONFERENCE ON APPLIED ECONOMICS (ICOAE) 2013
Volume 5, Issue -, Pages 581-588Publisher
ELSEVIER SCIENCE BV
DOI: 10.1016/S2212-5671(13)00068-3
Keywords
Municipality amalgamation; Cost inefficiency; Slack cost; Stacastic frontier analysis; Japan
Categories
Funding
- Grants-in-Aid for Scientific Research [24530378, 23730286] Funding Source: KAKEN
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This 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. (C) 2013 The Authors. Published by Elsevier B.V.
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