Evidence-based criteria for stopping local public services: Focusing on municipal expenditures in Tohoku Region

Abstract

　Much research on compact cities has concluded that urban compactness is desirable from various perspectives, including fiscal and environmental. Many studies from a fiscal perspective have estimated the optimal degree of urban compactness from the perspectives of minimizing fiscal expenditures and/or maximizing fiscal surplus. However, there are no studies that have gone so far as examining the stoppage of local public services. To realize urban compactness as an optimal urban structure, it is essential to establish evidence-based criteria for stopping local public services, and to develop policies to guide a city to its optimal compactness. In this study, we applied the concept of the shutdown point in firm theory to local public services, and estimated the population density at which marginal cost and average variable cost are equal. The study found that the criterion for shutting down local public services is a population density of 2,390 people/㎢.