A Dynamic Tiebout Theory of Voluntary vs. Involuntary Provision of Public Goods
AbstractThis paper considers a dynamic model of Tiebout-like migration between communities that utilize distinct allocation procedures for public goods. At issue is whether voluntary or compulsory procedures are more likely to prevail over time. We model infinitely lived individuals who make repeated, sequential location decisions over one of two communities. Each community uses a distinct mechanism for allocating public goods. The first is one in which contributions are given voluntarily by the citizenry of the community. The second is a compulsory scheme by which individuals are taxed proportionately to wealth with the tax determined by a majority vote. Opportunities to accumulate wealth exist via accumulation of public capital. The Markov Perfect equilibria of the dynamic game are studied. Our main result shows that when accumulated wealth converges to a steady state, individuals' locational choices eventually "select" the involuntary provision mechanism. This holds despite the fact that unanimous location in the voluntary provision community may in many cases remain as a Nash equilibrium of the static game each period. We also describe conditions under which voluntary provision survives. These conditions require that accumulation of capital fails to decrease wealth dispersion over time. The results are shown to be consistent with findings relating inequality to school choice. Copyright 1999 by The Review of Economic Studies Limited.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Wiley Blackwell in its journal Review of Economic Studies.
Volume (Year): 66 (1999)
Issue (Month): 3 (July)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- De Fraja, Gianni, 2006.
"Market and Public Provision in the Presence of Human Capital Externalities,"
CEPR Discussion Papers
5471, C.E.P.R. Discussion Papers.
- De Fraja, Gianni, 2008. "Market and public provision in the presence of human capital externalities," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 962-985, June.
- George Economides & Apostolis Philippopoulos, 2003. "Are Nash Tax Rates too Low or Too High? The Role of Endogenous Growth in Models with Public Goods," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(1), pages 37-53, January.
- Jaramillo, F. & Kempf, H. & Moizeau, F., 2000.
"Inequality and Club Formation,"
Papiers d'Economie MathÃÂ©matique et Applications
2000.36, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Epple, Dennis & Romano, Richard & Sieg, Holger, 2012. "The intergenerational conflict over the provision of public education," Journal of Public Economics, Elsevier, vol. 96(3), pages 255-268.
- Peter R. Mueser & David Mandy & Eric Parsons, 2011. "Population Population Movements in the Presence of Agglomeration and Congestion Effects: Local Policy and the Social Optimum," Working Papers 1123, Department of Economics, University of Missouri.
- Sigrid Roehrs & David Stadelmann, 2010. "Mobility and local income redistribution," Working Papers 2010/4, Institut d'Economia de Barcelona (IEB).
- Laura Marsiliani & Thomas I. Renstroem, 2010. "Privately provided public goods in a dynamic economy," Working Papers 2010_02, Durham University Business School.
- Ryuichi Tanaka, 2004. "On the Costs and Benefits of a Mixed Educational Regime," Econometric Society 2004 Far Eastern Meetings 470, Econometric Society.
- Sadrieh, Abdolkarim & Verbon, Harrie A.A., 2006. "Inequality, cooperation, and growth: An experimental study," European Economic Review, Elsevier, vol. 50(5), pages 1197-1222, July.
- Garrouste, Christelle & Loi, Massimo, 2009.
"Applications De La Theorie Des Jeux A L'Education: Pour Quels Types Et Niveaux D'Education, Quels Modeles, Quels Resultats?
[Applications of Game Theory in Education - What Types and At What Levels," MPRA Paper 31825, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.