2019 Volume 2019 Issue 72 Pages 139-158
This paper examines the relation between the municipal mergers and public facilities by the case study in Akita and theoretical analysis. Firstly, I show that (1) the construction cost in Ugo town which is The representative case of non-merged municipalities in Akita significantly decreased, (2) the construction cost in Akita city which is the representative case of merged municipalities increased, especially in the central part of a city, whereas the one in the peripheral part is very small, during the great mergers of Heisei.
Next, I theoretically show that (1) the project initiation in the non-merged municipalities may undersupply by the liquidity constraint, (2) the project initiation in the central district of the merged municipality may oversupply and the one in the peripheral district may undersupply, since the merged local government preferentially allocates the resources and the financial advantages of the municipal mergers for the central district for the purpose of welfare maximization in the region.
