Discontinuities in regional economic development due to administrative boundaries: Examining the mechanisms of the boundary effect

Although administrative boundaries are non-physical, they can cause regional inequalities through boundary effects that result in discontinuities between areas. The boundary effect refers to the disparities in policy, economic, and social aspects between areas caused by administrative boundaries, which can lead to regional differences. This study aims to identify the mechanisms that induce discontinuities in regional development due to administrative boundaries. The boundary effect mechanism assumed to include the spillover, fragmentation, and hierarchy effects were examined using six scenarios, each modeled using a spatial economic model. Through the comparison of various scenarios, we have demonstrated the potential validity of the three components comprising the assumed boundary effect. Furthermore, we have confirmed that the model incorporating all effects that we assumed in our research, namely spillover, fragmentation, and hierarchy effects, provides the best fit. We hypothesized and verified the mechanism of boundary effects that disrupt regional development, thereby enhancing the understanding of these effects.