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Migration-Proof Tiebout Equilibrium: Existence and Asymptotic Efficiency

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Author Info
John P. Conley (University of Illinois at Urbana Champaign)
Hideo Konishi () (Boston College)

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Abstract

Tiebout's basic claim was that when public goods are local there is an equilibrium and every equilibrium is efficient. The literature seems fall short of verifying this conjecture: If the notion of equilibrium is too weak then equilibrium is nonempty yet some equilibria could be inefficient. On the other hand, if the notion of equilibrium is too strong, then every equilibrium is efficient yet equilibrium may be empty. This paper introduces a new equilibrium notion, a \textit{migration-proof Tiebout equilibrium}, which is a jurisdiction structure such that (i) no consumer wants to migrate unilaterally across jurisdictions (free mobility of consumers), and (ii) no subgroup of consumers want to form a new jurisdiction that would not create instability in population distribution (free entry of migration-proof jurisdictions). We show that there is always a unique migration-proof equilibrium and is asymptotically efficient when consumers are homogeneous.

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Publisher Info
Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 452.

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Length: 26 pages
Date of creation: 01 Jan 2000
Date of revision: 01 Dec 2000
Publication status: published, Journal of Public Economics, 86, 241-260
Handle: RePEc:boc:bocoec:452

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  6. Guesnerie, Roger & Oddou, Claude, 1981. "Second best taxation as a game," Journal of Economic Theory, Elsevier, vol. 25(1), pages 67-91, August. [Downloadable!] (restricted)
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  7. Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Econometrica, Econometric Society, vol. 67(5), pages 1185-1218, September.
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  8. Demange, Gabrielle, 1994. "Intermediate preferences and stable coalition structures," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 45-58, January. [Downloadable!] (restricted)
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  9. Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-40, May. [Downloadable!] (restricted)
  10. John P. Conley & Myrna Holtz Wooders, 1998. "The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibrium," Working Papers mwooders-98-06, University of Toronto, Department of Economics. [Downloadable!]
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  19. Wooders, Myrna, 1978. "Equilibria, the core, and jurisdiction structures in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 18(2), pages 328-348, August. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Sebastian Kranz, 2006. "Moral Norms in a Partly Compliant Society," Levine's Bibliography 321307000000000092, UCLA Department of Economics. [Downloadable!]
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  2. Stutzer, Alois & Bruno S. Frey, 2004. "Stress That Doesn't Pay: The Commuting Paradox," IZA Discussion Papers 1278, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Frank H. Page, Jr. & Myrna H. Wooders, 2005. "Club Formation Games with Farsighted Agents," Working Papers 0529, Department of Economics, Vanderbilt University. [Downloadable!]
  4. Gabrielle Demange, 2004. "Group formation: The interaction of increasing returns and preferences' diversity," DELTA Working Papers 2004-30, DELTA (Ecole normale supérieure). [Downloadable!]
  5. Gilles, R.P. & Lazarova, E.A. & Ruys, P.H.M., 2008. "Stable Economic Cooperation: A Relational Approach," Discussion Paper 2008-25, Tilburg University, Center for Economic Research. [Downloadable!]
  6. John P. Conley & Myrna Wooders, 2004. "Hedonic Independence and Taste-homogeneity of Organizations with Crowding Types," Annales d'Economie et de Statistique, ADRES, issue 75-76, pages 12, Juillet-D. [Downloadable!]
  7. Hideo Konishi, 1999. "Concentration of Competing Retail Stores," Boston College Working Papers in Economics 447, Boston College Department of Economics. [Downloadable!]
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