Abstract ：
　This study presents a theoretical analysis examining whether abundant small municipalities increases efficiency. In recent years, large scale municipal consolidations have decreased the number of municipalities; however, some small municipalities have not consolidated and remain viable. This study examines the value of these circumstances. In the model analysis, this study uses the land capitalization. 　This study found the following results. The optimal number of cities is larger than one only when a sufficient amount of land is needed for housing production. In this case, as the effect of local public good on preference and scale economies in producing the local public good are smaller, the optimal number of cities rises. When local public sector influence decreases, larger number of municipalities is more efficient and the economy has no need of consolidation. JEL classification: R23, R53, H41, H73

Keywords: regional population; local public good; land capitalization; municipal consolidation