Simulation Studies on the CO2 Emission Reduction Efficiency in Spatial Econometrics: A case of Japan

In this paper, we estimate the CO2 emission function based on the production function, taking into account the interregional spillover effect in Japan. Using the estimated result, we propose suitable means of simulation using spatial econometrics and simulate which prefecture can reduce the CO2 emission most efficiently. Our results indicate that prefectures that are located in urban areas reduce CO2 emissions more efficiently than do those located far from urban spaces.