Financial impacts of standardized system specifications: evidence from japanese municipalities

This paper examines whether standardized system specifications improve the fiscal efficiency of local governments. Although ICT has been widely promoted through e-government initiatives to improve government operations, the effectiveness of system standardization has received limited attention. We study Japan’s Regional Information Platform (RIP), a standardized system specification that facilitates interoperability across municipal administrative systems and weakens vendor lock-in. Building on a model of municipal procurement under switching costs, we show that standardization reduces expenditure through two channels: weakened vendor lock-in that lowers system costs, and improved cross-departmental interoperability that reduces labor input. Using variation in RIP adoption across Japanese municipalities, we estimate difference-in-differences models and find that RIP adoption substantially reduces per capita total expenditure. These findings suggest that e-government outcomes depend not only on ICT adoption itself but also on whether administrative systems are standardized and interoperable.