Does the Compacting of Cities Enhance the Efficiency of Municipal Administrations in Japan?

Abstract

This study quantified inefficiency by incorporating geographic factors, previously unconsidered, into a stochastic frontier expenditure function model (excluding general administration and local council expenses). The analysis revealed that, with the exception of the special heavy snowfall zone dummy, specific geographic factors (heavy snowfall zone dummy, Amami/Ogasawara dummy, Okinawa dummy, remote island dummy, and nuclear power plant location dummy) increased the inefficiency of both total expenditure and total expenditure excluding general administration and local council expenses. The study also examined the relationship between inefficiency and city structure. The analysis showed varying relationships between inefficiency values and city structure across municipalities. On average, city compactness reduces the inefficiency of a municipality, and polycentric cities were found to be more efficient than monocentric cities.