Intermunicipal cooperation, integration forms, and vertical and horizontal effects in Japan

• Published date: 01 May 2023
• Author: Yu Noda
• Date: 01 May 2023
• DOI: http://doi.org/10.1111/puar.13569

RESEARCH ARTICLE

Intermunicipal cooperation, integration forms, and vertical

and horizontal effects in Japan

Yu Noda

Faculty of Policy Studies, Doshisha University,

Kyoto, Japan

Correspondence

Yu Noda, Faculty of Policy Studies, Doshisha

University, Shinmachi-dori, Imadegawa-Agaru,

Kamigyo-ku, Kyoto, 6020047, Japan.

Email: ynoda@mail.doshisha.ac.jp

Funding information

JSPS KAKENHI, Grant/Award Number: 19K01490

Abstract

This article identifies the effects of intergovernmental relations, particularly vertical

relations between municipalities and higher levels of government where Institu-

tional Collective Action has traditionally been under-discussed, on types of collab-

orative benefits and different integration forms. The analysis was conducted using

data from municipalities on the capital-intensive service of waste management.

The findings reveal that favorable horizontal relationships between municipalities

enhance their capacity to solve both municipal and regional issues. The study also

found that a high level of benefits emerged in contracted services when the hori-

zontal relationship was highly favorable. In addition, vertical relationships with

higher-level governments contributed to improving fiscal efficiency, with greater

perceived benefits of collaboration in the case of special district governments. The

results suggest that while autonomous horizontal collaboration increases munici-

pal capacity to solve issues, establishing collaborative relations with organizations

from outside the municipality has the potential to generate an efficient integration

system.

Evidence for Practice

•Vertical relationships with higher-level governments improve the financial effi-

ciency of municipalities in special district governments.

•Horizontal relationship features between municipalities, such as trust and ties

among residents, reduce perceived transaction costs and effects on collabora-

tive benefits.

•When the extent of horizontal relationships among municipalities is high,

greater benefits can be perceived for contracted services than for special district

governments.

Municipal and regional issues are interlinked in most policy

areas, requiring collective action rather than policies of indi-

vidual municipalities. The appropriate balance between gov-

ernance issues and governing bodies has traditionally been

analyzed through consolidated and fragmented government

systems (Lyons & Lowery, 1989), which paid insufficient

attention to intermunicipal cooperation (IMC). New regional-

ism advocates for consolidation and collaboration of IMC to

promote metropolitan area-oriented policies (Brenner, 2002;

Savitch & Vogel, 2000), and polycentrism argues for promot-

ing the effectiveness of multicenter governance through IMC

(Ostrom et al., 1988). Neither approach, however, sufficiently

considers vertical relationships between municipalities and

higher-level governments such as the county, province, pre-

fecture, state, and central government.

In environments with municipalities operating under

the influence of the central government, the effects of

IMC are comprehensively understood only when exam-

ined together with vertical integration. Institutional collec-

tive action (ICA) encompasses both vertical and

horizontal interactions, which are ICA dilemmas, including

those two relations and functional coordination of policy

areas (Feiock, 2013). Although IMC focuses on partner-

ships between regional organizations, because these rela-

tionships are subsidized and influenced by central and

state governments, they also involve dimensions of cen-

tralization and decentralization (Kwon et al., 2014). Within

the ICA framework, this study uses survey data from Japa-

nese municipalities to examine the effects of vertical and

horizontal intergovernmental relations on perceived

Received: 30 March 2022 Revised: 21 October 2022 Accepted: 21 October 2022

DOI: 10.1111/puar.13569

654 © 2022 American Society for Public Administration. Public Admin Rev. 2023;83:654–678.wileyonlinelibrary.com/journal/puar

transaction costs and collaborative benefits. Notably, ICA-

related research has not thoroughly explored the impact

of such vertical relationships (Kim et al., 2022).

Understanding how public officials perceive the actual

benefits of government cooperation is essential to identi-

fying the mechanisms that motivate collaboration. Bene-

fits of collaboration are usually recognized differently by

officials depending on the type of collaboration form that

is the integration mechanism (hereinafter called “integra-

tion form”). One of the main differences in integration

forms is whether collaboration involves establishing orga-

nizations. Accordingly, this study considers the differ-

ences in such integration forms in examining the

influence of vertical and horizontal structures on the per-

ceived benefits of collaboration.

Based on Feiock’s research (Feiock, 2004,2007,2009,

2013; Feiock et al., 2017), which revealed relationships

among key variables of ICA, other studies have been con-

ducted in various areas, including economic development

(Chen et al., 2016; Hawkins & Andrew, 2010; Lee

et al., 2012; Park & Feiock, 2006; Percoco, 2016), the envi-

ronmental arena (Gerber et al., 2013; Yi et al., 2018), and

emergency policies (Wilson, et al. 2020). Benefits of IMC

are likely to be captured in the capital-intensive service

areas of firefighting and sanitation, which require the col-

laboration of small municipalities that have difficulty mak-

ing large capital investments (Baba & Asami, 2020).

This study targets IMC in the field of waste manage-

ment as a capital-intensive municipal service. Capital can

be captured in terms of asset specificity and measure-

ment difficulties as factors of transaction costs, as dis-

cussed by Williamson, Oliver E. (1979). Waste

management needs less investment than water supply

and firefighting facilities but requires a certain scale of

investment; hence, the asset specificity is moderate. If the

asset specificity is too high, the IMC probability decreases,

but as the asset specificity increases from low to medium,

the IMC probability increases (Shrestha & Feiock, 2011).

Measurement difficulties, by contrast, are lower, and are

easier to monitor, promoting the externalization of IMC

and services (Shrestha & Feiock, 2011; Szmigiel-Rawska

et al., 2021). As such, the discussion in this study targets

capital-intensive services in which collaborative needs

originally existed.

In Japan, the local government structure consists of

47 prefectures with 1718 municipalities, excluding the 23

wards of Tokyo, which are internal bodies of the Tokyo

Metropolitan Government. Unlike the United States,

where there are unincorporated areas within counties,

residents in Japan always pay taxes to both municipalities

and prefectures and receive services from these two types

of government. The autonomous collective action of local

governments in Japan within a unified structure is well

established with fewer regional differences than in the

United States. Under the division of roles whereby prefec-

tures are responsible for wide-area services and munici-

palities are responsible for basic services, voluntary

cooperative efforts have been promoted among munici-

palities. The findings on these functional intergovernmen-

tal relations are a fundamental reference for considering

various local government structures in other countries.

The next section overviews the historical background

of IMC promotion policies in Japan and then discusses

the ICA.

IMC PROMOTION POLICIES IN JAPAN

This study focuses on special district governments (for-

mally called “partial service associations”in Japan), in

which organizations are established to collaborate, but

contracted services do not establish organizations. Special

district governments in the United States and Japan are

established for the monopolistic production and supply

of specific public goods and differ from regional intergov-

ernmental organizations so-called RIGOs which aim to be

the voice of the region under a broad agenda and the

largest geographic scale to embody representational

rights (Miller & Nelles, 2020). In Japan, however, some offi-

cials are dispatched from the constituent municipalities

to serve in this new government body, and council mem-

bers serve on both. Therefore, the policy direction

depends on the intentions of the constituent municipali-

ties; thus, the lack of independent fiscal authority results

in somewhat more limited autonomy.

IMC has been implemented throughout Japan since

the 1960s when prefectures under the central govern-

ment established geographical areas to maintain services

for municipalities with limited resources and encouraged

intermunicipal cooperation. This is recognized as the

wide-area administrative region policy (WARP). WARP

geographical areas were established to encourage coop-

eration between urban and rural areas as well as between

large cities and their surrounding areas with incentives of

subsidies and grants to the municipalities. Consequently,

special district governments were established nationwide.

In 2018, contracted services accounted for 72.1% of all

IMC arrangements (outsourcing residential certificate issu-

ance was the most common), followed by the special dis-

trict government, which accounted for 20.1% (the most

common was waste management) (MIC, 2018).

Municipal mergers have been promoted by the cen-

tral government since the late 1990s to enhance the

finances of the municipalities. Each prefecture has devel-

oped a strategy for the pattern of municipal mergers

within its jurisdiction, prompting higher-level govern-

ments to provide municipal merger subsidies under the

Law for Special Exceptions to Municipal Mergers. How-

ever, between 2004 and 2006, the central government

implemented fiscal system reforms that drastically

reduced local tax allocations, making the maintenance of

public services of small municipalities challenging. Thus,

the number of independent municipalities fell by (46.5%),

from 3229 in 2000 to 1727 in 2010. The government

declared the end of the pro-merger policy in 2010; since

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