New Frontiers of Policy Evaluation in Regional Science

The decline in local economies has become more serious in recent years, and globalization has resulted in increasing regional disparities. The reason the gap has widened so much lies in the basic principle of a market economy: companies that operate in a market economy seek to maximize profits. There is no doubt that this pursuit of profit will be the engine of economic growth, but it is also true that continuing to increase profits raises various concerns. While it is true that the production structure of global companies is very efficient, social disparities will continue to grow.

In this paper, we construct an economic development model for two regions (south and north) and three sectors (agriculture, industry 1, and industry 2). We show that due to labor constraints in industrialized regions, each region specializes in the production of different goods only by increasing wages, and present a model showing the process that achieves endogenous equal development.

Initially, even if capital accumulation in the two industries is more advanced in the north than in the south, labor supply will be short in the north, and wages will rise in that region. The competitiveness of the north declines, and in industries where capital accumulation has been relatively slow in the north, the south can also develop. As a result, each region will specialize in one industry. However, this results in a wage gap between the north and south.

This chapter investigates the possibility of ex-post risk management for local governments facing the risk of tap water pollution; this is still required to deal with the difficulty of prediction and urgency, even after the ex-ante risk management method has been introduced into the tap water quality management system. In Sect. 2.1, we categorize three ex-post risk management methods. In Sect. 2.2, we analyse the efficiency of risk sharing using insurance contracts. Then, based on the implications of the analysis in Sect. 2.2, the applicability of insurance risk sharing in tap water pollution is discussed in Sect. 2.3.

By investigating the applicability of insurance by the agency theory, we showed that the subsidy-based risk sharing system is promising as an ex-post management system of water pollution risk. However, distortions in resource allocation due to the subsidy system are not negligible problems; it is necessary that a comprehensive comparison of the applicability of an ordinary private insurance system is conducted, which can better enjoy the efficiency of the market mechanism. The benefits of creating an integrated insurance system for comprehensive environmental risks including air pollution or soil pollution is discussed, which will bring benefits of risk pooling and lower insurance premium in the case that the insurance applicability fails because the water pollution risk from tap water alone has no marketability for small-sized businesses.

The notion of a reservation value is a key feature of most contemporary dynamic and stochastic models of land development. It is clear that the magnitude of the reservation value has a fundamental bearing on the decision to develop or preserve land. This notwithstanding, many studies that analyze land development in a dynamic and stochastic setting treat a landowner’s reservation value as an exogenous variable. Therefore, the purpose of this chapter is to endogenize the reservation value in the context of a model of land development over time and under uncertainty. Our analysis shows that the optimal reservation value is the solution to a specific maximization problem. In addition, we also show that there exist theoretical circumstances in which the optimal reservation value is unique.

This study is intended to examine an optimal tax policy necessary to establish an efficient industrial garbage disposal system. The amount of industrial waste created by various processes of production in Japan has remained at a high level over the last several years. This, in turn, results in a shortage of disposal space, engendering frequent cases of illegal disposal. We analyze environmental policies instituted to regulate illegal disposal and establish a social optimum. As a result, we show that a subsidy policy works better than a strict monitoring policy.

In this paper, we analyze disaster recovery policies in disaster-affected areas and their impact on regional economic activities and on migration. We first integrated the elements of natural disasters into a simple model related to agglomeration. It is assumed that agglomeration increases not only productivity but congestion costs as well. When a natural disaster occurs, it damages production factors and increases the firms’ costs. At that point, productivity and income decrease in the disaster-affected area. Consequently, people move to other cities. Next, we extended the model to analyze regional loyalty. Presuming that there is little difference between living in the original home and living in other regions, people will continue to stay in their hometown because monetary gains from migration are lower than the cost (including nonmonetary costs) of moving and living in a new town. Multiple steady states exist when regional royalties are taken into consideration. Finally, we consider the case where productivity depends on public capital, which is degraded by a natural disaster. Once a population drain occurs due to migration, fiscal policies intended to recover public capital might be an overinvestment that could deteriorate the regional economy further. In that case, such policies might induce further population outflow.

Central place theory, as used in market area analysis, explains how economic activity is spatially organised, and how the systematic organisation of such activity can optimise it. However, this work has devoted little attention to problematic issues in rural areas, which are nearly free of the diseconomies associated with urbanisation, such as pollution and congestion, but which often have difficulty accessing goods and services. This paper will demonstrate how an alternative spatial economic structure can be organised within the framework of central place theory and describe what sort of regional system is required to sustain the availability of goods and services in rural areas.

Recently, the importance of urban agglomeration increases by the progress of the globalization of the world economy. This paper is a general equilibrium analysis on the urban agglomeration economy brought about by the product variety and agglomeration diseconomy by the congestion in a city in a three-city system model. The main discussion is about the impacts that the interregional transportation cost gives to the urban concentration and dispersion. Our main conclusion is that dispersion necessarily appears when the interregional transportation cost is sufficiently low. We also implement numerical simulations using specific parameter values and depict the transition from dispersion to agglomeration and then re-dispersion when the interregional transportation cost monotonically decreases over time. In the numerical simulation using realistic data values, imperfect agglomeration appears. In this case, the agriculture sector with the high productivity prevents the outflow of manufacturing industries resulting in the existence of urban functions even with the less population.

Extending Lahiri and Ono’s (2007) model of an oligopoly with emission regulation, by incorporating a foreign rival, we compare the effectiveness of a relative emission standard versus an emission tax. We consider following two cases. In the first case, where only the home/domestic country unilaterally implements policies, an emission standard is Pareto superior to an emission tax, whereas it is unclear which policy is better for the foreign country. In the second case, where both countries simultaneously choose environmental protection, the home country prefers a standard to a tax, while foreign country prefers a tax to a standard.

This chapter shows that (1) the financial situation of the country in the 1990s deteriorated significantly; (2) the financial deterioration of the country in the 1990s had an adverse effect on local public finance, and the trinity reform was implemented before the adverse effect was corrected; and (3) the need for a Do-shu-system has increased due to the increase in “non-residential villages” or “non-residential areas” due to the decrease in migration.

There have been many empirical researches about the entrepreneurship of start-ups by focusing on the entrepreneurial motivations, the institutional, and social factors. However, there is few on the factors affecting the innovativeness of star-ups by comparing social enterprises and commercial enterprises.

Since the 2000s, social enterprises have reached a certain scale in terms of value added and employment in Japan. Although, social enterprise which executes dual-mission has potential to contribute to the inclusive growth and development of the society, it is not easy for social enterprises to solve social problems through a sustainable development of business through creating innovative products and services.

Through the experiences of the Great 1994 Hanshin-Awaji earthquake and the Great 2011 East Japan earthquake, it has been important for local governments to build the comprehensive evacuation program on a large earthquake occurrence in near future. According to the experts’ forecast, huge earthquakes will occur around the coast areas of Pacific Ocean in Japan in near future. Therefore, it is indispensable to give appropriate information and knowledge on human behavior for the evacuation time. It is also necessary to urge the residents to select rational behaviors. Therefore, a new methodology based on behavior-oriented agent system should be developed to show our community activities. In this study, the production rules of each agent were constructed due to the expected activities based on the questionnaire survey. Next, by using the set of production rules composed of such data, multi-agent system models were built for analyses on both the evacuative behavior and the behavior of return trips to home during a hypothetical large-scaled earthquake. The simulations were tried by using specific data including those of the Person Trip Survey. It comes to the conclusion that the human behaviors during the earthquake were simulated by multi-agent system model and as a result, the appropriate evacuation method was discussed and the possibility of the return home was found in view of the conditions of the roads and the human attributes.

Generally, economic growth converts the consumption structure of food due to the difference in the income elasticity of demand for each article of food. In addition to income and price, consumer preference also strongly influences the consumption structure of food. In recent China, with the progress of globalization, there has been a move toward a shift to a sustainable food system in addition to a shift to a modern one. Since structural changes in food consumption and in the retail market are the driving forces of the dynamism of food system, it is significant to understand the current situation and clarify the issues of food system transition for policy-making.

The purpose of this study is to capture the dynamic changes in food consumption in China by focusing on the rice retail market. Specifically, we introduce hedonic approach to analyze the factors of price formation using the information on e-commerce of rice for verifying our two hypotheses. These are “China’s rice retail market is in a monopolistic competition characterized by product differentiation” (H1) and “The Meaning-based brands related to the formation of sustainable food market are developing in the rice retail market in China” (H2). In addition, we conduct the survey at retail stores in Shanghai to reinforce our analytical results. Finally, we draw policy implication on the strategy for Japanese rice marketing in China based on our empirical study.

An ecological migration policy has been implemented since 2001 as part of China’s Western Development Strategy. This policy aims to allow development in ecologically fragile areas, particularly ethnic minority regions, to cope with poverty, while simultaneously protecting the environment. Researchers from ethnic minorities who reside overseas have asserted that the promotion and implementation of this policy amounts to cultural genocide based on prejudice and discrimination by the Han Chinese leadership against livestock breeding. Because of population growth by the large scale migration of the Han race, over farming, and excessive development, land resources are remarkably degenerating in Inner Mongolia. Till 2004, it is said that 90% of the grassy plain degenerated. In order to restore the destroyed environment, “conservation set-aside grasslands and forests program” came to be carried out over a wide area in China from the 1990s. To the farmers who have difficulty in earning their livelihood, “Ecological Migration Policy” appears as the supporting factor. From the standpoint of the influence on pastoralists’ household economies, the structure of income and the expenditure of pastoralists after migration will be clarified. In addition, the simulation of cases of “not emigrating” will be done. By comparing the simulation cases to current cases, analysis on the influence of “Ecological Migration Policy” given to pastoralists’ household economies will be clarified. It is important not only for the government but also for private corporations and local communities to enhance their concerns for the environment, and to support “ecological migrants,” realizing their contribution for the environment. Supporting the life of pastoralists is a necessary condition for the success of the “Ecological Migration Policy,” and that is also the first step for the success of the environmental policies.

As environmental problems, such as global warming and ozone layer depletion, have a significant influence on various ecosystems, it is imperative to examine this relationship in depth. This is especially true for specific ecosystems, such as lakes, and the environmental problems affecting them. In this study, we propose a synthesized environment management policy, such as the control of water and air pollutant emissions, using a computer simulation. We considered both the ecological system in and around Lake Kasumigaura in Japan and the related socioeconomic changes in the catchment areas of the lake during a certain period. The pollutants measured in this study are total nitrogen, total phosphorus, and chemical oxygen—taken as water pollutants—as well as carbon dioxide, sulfur oxide, and nitrogen oxides, taken as greenhouse effect gases and air pollutants. This study targeted the simulation period between 1999 and 2007, which was when some of the research and development projects for new air pollution abatement and water quality improvement technologies started in this basin. The objectives of this research were to identify policy considerations for effectively reducing air and water pollutants in the basin without new technology and the kind of impact these policy considerations will have and to uncover how environmental load reduction technologies should be designed. The results show that governments should take advantage of the immediate effect of the capital reduction subsidy and prioritize budget allocations to reduce air pollutants in the earlier years of the target period. The government should then install domestic wastewater facilities such as sewage systems to reduce water pollutant emissions. The results also show that more economically efficient water pollutant-reduction technologies are required, especially those that transform pollutant emissions to single molecular form. The results of this research can contribute to the validity evaluation of research and development projects that have been implemented in this basin thus far.

In this study, we developed a monopolistic competition model to analyze the impact of a high-speed railway on the economy of the Chubu region of Japan. Normally, in monopolistic competition models, it is assumed that the elasticity of substitution is constant. In our model, however, it is assumed that the elasticity of substitution differs between goods produced in the region and composite goods. Two types of transaction costs are considered: logistics service costs and information service costs. Impact analysis using this model produced the following findings. If a Maglev high-speed train line is opened between Tokyo and Nagoya, the Chubu region will experience growth in automotive industries and other processing and assembly industries. On the other hand, the Kanto region will experience growth in service industries. If the Maglev train line is extended to Osaka, the Chubu region will see growth in processing and assembly industries and the Kinki region will see growth in basic material industries and consumer goods industries. In the latter case, the Kanto region will again experience growth in service industries.

Over the past decades, the Asia-Pacific Rim has exhibited an unprecedented high degree of economic and geographic dynamics. Clearly, cities in this region display heterogeneity in terms of economic performance, technological innovativeness, environmental conditions and cultural recognition and interaction. It is, therefore, interesting to develop an efficiency ranking of the multidimensional performance of these large cities. The first aim of this chapter is now to undertake a multifaceted performance ranking of large cities in the Asia-Pacific region by using a DEA (data envelopment analysis). A second aim of the present chapter is to perform a sensitivity analysis on the type of DEA employed, so as to test the robustness of the base ranking obtained from a standard DEA. A third aim of the chapter is to present a performance improvement projection based on the original DEA model and our new projection model for inefficient cities. These three aims of the research will be empirically addressed by using a comprehensive data set on seven quantitative main indicators regarding economic performance, technological innovativeness, environmental conditions and cultural recognition and interaction for 13 Asia-Pacific supercities.

This paper aims to quantitatively analyze the relationship between interregional / intraregional population migration and regional income disparity in China in the 1980s and 1990s using econometric methods.

Therefore, in this paper, China is divided into the following regions in detail. (1) divided into three regions: the developed coastal regions, the retarded inland regions, and the middle regions; (2) further, divided these regions into two areas (urban and rural); and (3) divided the two areas into two sectors (formal and informal).

In this paper I divided China into the developed coastal, the retarded inland, and middle regions. These regions were divided into urban and rural areas and then divided into formal and informal sectors.

Based on this regional classification, I created a time series data set for the period from 1978 to 2001. And then, a “two-region (urban and rural), two-sector (formal and informal) econometric model” was built, and various simulations performed. This is the most detailed model for a developing country.

Inter-provincial migration and urbanization trends are important factors when discussing the development of Chinese economy, trends in interregional disparities, and inland region development. However, there are scarce of statistical information, empirical analysis, and econometric studies on the scale and pattern of internal population migration, the amounts of remittances by migrant workers to their hometowns. Therefore, this paper quantitatively clarifies these factors, including regional disparities.

The Japanese real estate industry is characterized as vertically related under a successive oligopoly in which landowners and real estate agents are upstream and downstream businesses, respectively. This chapter proposes that supply increases through backward integration and that the output effect is smaller when each of the several downstream businesses integrates backward with plural upstream businesses than when one-to-one integrations are contemplated. In turn, we demonstrate that each (additional) backward integration generally increases profits for the merged entity, whereas profits for the remaining independent businesses decrease with successive integrations. Therefore, incentives exist for the excluded businesses to integrate to recover their lost profits. When all such inadvertent integrations occur, an alternative strategy still prevails for joint enterprises that cannot go back to the original state of nonintegration: a strategy to form one-to-one backward integrations by establishing more downstream sections.

This chapter quantitatively examines the characteristics of regional agricultural productivity change and the role of basic conditions in improving productivity, especially for hilly and mountainous municipalities. Using the municipality data of Chugoku agricultural region in Japan, which has many municipalities known for being less favored areas, we examine the characteristics of regional agricultural growth from 2005 to 2015 by measuring the Malmquist productivity index (MPI) based on the DEA model.

We obtain the following findings. First, regional disparities of agricultural growth expanded from 2005 to 2015. Efficiency change values were distributed more widely than technical change values. As a result, in many municipalities, the MPI was distributed under 1.0. These results indicated different trends between agricultural output and farm sales amount cases. Second, the increase in sales channel of JA cooperatives has positive influence on productivity change, while increase in sales channel of retailers has negative influence. In addition, farm management area per farmer has negative influence on productivity change. Third, gender of the manager and farmer diversity have positive influence on the productivity change. Farmers allowing others to use their land and community-level cooperation, such as farmland conservation, also play important roles in the efficient use of farmlands to promote productivity change. Fourth, competitiveness and cooperation elements such as the density of main farmers and mutual help in farm labor play important roles, especially in hilly and mountainous areas. These findings suggest that utilizing diversity of farmers and community-level cooperation is important in maintaining regional agriculture, especially in hilly and mountainous areas.