Discussion Papers 2019
CIRJE-F-1129 | "Intergovernmental Competition for Donations : The Case of the Furusato Nozei Program in Japan" |
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Author Name | Fukasawa, Eiji, Takeshi Fukasawa and Hikaru Ogawa |
Date | October 2019 |
Full Paper | |
Remarks | Subsequently published in Journal of Asian Economics, vol.67, 101178. |
Abstract |
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This paper shows that municipalities compete excessively for donations under a unique program called Furusato Nozei (Tax payment to hometown) in Japan. Under the program, people make donations to their favorite municipalities and municipalities that have received donations give "reciprocal" gifts in return. Our estimates show that municipalities facing competition to attract donations provide excessive gifts to donors, and net revenue from the program is 10.4% to 12.1% lower than in a scenario without competition. |