The Impact of the Designated Manager System of Japanese Public Halls: Measuring Technical, Allocative, and Productive Efficiency
This paper attempts to measure how the productive efficiency of Japanese public
halls has changed following the introduction of the Designated Manager System
(DMS). The DMS which was introduced for public halls around 2006 was intended
to introduce market mechanisms into the public sector. In particular, we
hypothesize that the DMS has forced the managers of public halls to be more cost
conscious, leading to an improvement of the soft budget problem. That is, the
production possibility frontier function for public halls is expected to shift outwards,
and production inefficiencies would be smaller as a result of the introduction of the
DMS. An unbalanced panel data set from 2004 to 2009 on 200, roughly 10 % of the
total number of public halls, randomly chosen public halls was used to estimate a
stochastic production frontier. It is found that the introduction of the DMS did
lead to an upward shift of the production frontier, but it did not lead to any large
change in the efficiency of production.
