Population Decline and Service Continuity: Spatial Patterns of Site Consolidation in a Linear Market

Abstract

Population decline is the most serious social problem in Japan. In this paper, a simple linear market over which population is distributed uniformly is considered to evaluate the possibility of service continuity under declining population. The households are guaranteed to enjoy the fixed level of utility derived from land and the 'good'. Starting from the initial allocation with ten sites, we first conduct numerical analysis of the case where uniform distribution of population is maintained after decline. Since negative bid-rents are observed in the vicinity of closed sites, the rent subsidy would become necessary to maintain the uniform distribution. Second, in the case where the lot size is kept at the initial size, collective living emerges. The vertical separation scheme where the government will cover the fixed costs would be relevant. Both schemes require some government intervention.