Abstract
In this chapter, we measure the extent to which the suppression of urban sprawl reduces the marginal cost of providing local public services in Japan by estimating the local expenditure function. We expand on existing estimates in Japan by establishing a theoretical framework to economically interpret the estimated parameters. Specifically, we first derive the estimated local expenditure function by combining the supply and demand functions for local public services. Second, we implement the estimation using cross-sectional data from 2008 for 1085 Japanese municipalities. Overall, urban sprawl growth has a positive and significant impact on local expenditure, with the parameters for the relationship estimated to be between 0.011 and 0.055. This statistically significant and theoretically consistent outcome suggests that, in Japan, a one percent decrease in urban sprawl can reduce the marginal cost of providing local public services by 0.053–0.113%. These results contribute to the quantitative evaluation of compact cities.
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- 1.
Galster et al. (2001) define urban sprawl on the basis of urbanized areas corresponding to densely inhabited districts (DID). However, there are no DIDs in small Japanese municipalities. As this study aims to analyze all municipalities in Japan, we cannot use this measure directly.
- 2.
Bradford et al. (1969) called the former outputs “D-outputs” and the latter outputs “C-outputs.”
- 3.
The function is not strictly a demand function, but it is so named for the convenience of description.
- 4.
The basic component (κ) reflects not only the responsibilities of the local government but also the basic local public services required for citizens’ lives regardless of economic factors, intergovernmental transfers, and regional preferences. When we estimate the outcome demand function for local public services, this component is the constant term.
- 5.
Expenditures include costs unaffected by urban sprawl.
- 6.
This model excludes the cases in which all characteristics are homogeneous or heterogeneous in spatial information. When all characteristics are heterogeneous, the urban structure (D) must include multiple spatial information characteristics. However, this operation is not feasible for the reasons described above. When all characteristics are homogeneous in spatial information, the variables are composed of only density information. As previously stated, such a measure might be insufficient.
- 7.
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Acknowledgements
We thank Isao Horiba, Hideo Nakai, and all other authors of this book for useful suggestions. This work was in part supported by JSPS KAKENHI, Grant Number JP26512009 and JP17K03787.
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Ida, T., Ono, H. (2019). Urban Sprawl and Local Public Service Costs in Japan. In: Kunizaki, M., Nakamura, K., Sugahara, K., Yanagihara, M. (eds) Advances in Local Public Economics . New Frontiers in Regional Science: Asian Perspectives, vol 37. Springer, Singapore. https://doi.org/10.1007/978-981-13-3107-7_11
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