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The effect of spillovers and congestion on the segregative properties of endogenous jurisdictions formation

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  • Rémy Oddou

    (THEMA, Universite de Cergy-Pontoise)

Abstract

This paper analyzes the e ect of spillovers and congestion of local public services on the segregative properties of endogenous formation of jurisdictions. Households choosing to live at the same place form a jurisdiction whose aim is to produce congested local public services, that can create positive spillovers to other jurisdictions. In every jurisdiction, the production of the local public services is nanced through a local tax based on households' wealth. Local wealth tax rates are democratically determined in all jurisdictions. Households also consume housing in their jurisdiction. Any household is free to leave its jurisdiction for another one that would increase its utility. A necessary and sucient condition to have every stable jurisdictions structure segregated by wealth, for a large class of congestion measures and any spillovers coecients structure, is identi ed: the public services must be either a gross substitute or a gross complement to the private good and the housing.

Suggested Citation

  • Rémy Oddou, 2011. "The effect of spillovers and congestion on the segregative properties of endogenous jurisdictions formation," THEMA Working Papers 2011-24, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2011-24
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    File URL: http://thema.u-cergy.fr/IMG/documents/2011-24.pdf
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    References listed on IDEAS

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    1. Francis Bloch & Unal Zenginobuz, 2007. "The effect of spillovers on the provision of local public goods," Review of Economic Design, Springer;Society for Economic Design, vol. 11(3), pages 199-216, November.
    2. Gravel, Nicolas & Thoron, Sylvie, 2007. "Does endogenous formation of jurisdictions lead to wealth-stratification?," Journal of Economic Theory, Elsevier, vol. 132(1), pages 569-583, January.
    3. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    4. Westhoff, Frank, 1977. "Existence of equilibria in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 14(1), pages 84-112, February.
    5. Rongili Biswas & Nicolas Gravel & Rémy Oddou, 2008. "On the Segregative Properties of Endogenous Jurisdiction Formation with a Central Government," IDEP Working Papers 0802, Institut d'economie publique (IDEP), Marseille, France, revised 05 2008.
    6. Bloch, Francis & Zenginobuz, E. Unal, 2006. "Tiebout equilibria in local public good economies with spillovers," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1745-1763, September.
    7. Greenberg, Joseph, 1977. "Existence of an equilibrium with arbitrary tax schemes for financing local public goods," Journal of Economic Theory, Elsevier, vol. 16(2), pages 137-150, December.
    8. Biswas, Rongili & Gravel, Nicolas & Oddou, Rémy, 2009. "The segregative properties of endogenous jurisdictions formation with a welfarist central government," POLIS Working Papers 121, Institute of Public Policy and Public Choice - POLIS.
    9. Rose-Ackerman, Susan, 1979. "Market models of local government: Exit, voting, and the land market," Journal of Urban Economics, Elsevier, vol. 6(3), pages 319-337, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Jurisdictions; Segregation; Spillovers; Congestion JEL Classi cation: C78; D02; H73; R13;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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