This paper studies the stability of a finite local public goods economy in horizontal differentiation, where a jurisdiction's choice of the public good is given by an exogenous decision scheme. In this paper, we characterize the class of decision schemes that ensure the existence of an equilibrium with free mobility (that we call Tiebout equilibrium) for monotone distribution of players. This class contains all the decision schemes whose choice lies between the Rawlsian decision scheme and the median voter with mid-distance of the two median voters when there are ties. We show that for non-monotone distribution, there is no decision scheme that can ensure the stability of coalitions. In the last part of the paper, we prove the non-emptiness of the core of this coalition formation game
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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number
471.00.
Find related papers by JEL classification: C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
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