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The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibrium

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  • John P. Conley
  • Myrna Holtz Wooders

Abstract

We introduce a model of an local public goods economy with a continuum of agents and jurisdictions with finite population. Under an especially mild condition of boundedness of per capita payoffs we show nonemptiness of the core of the economy. We then demonstrate that the equal treatment core coincides with the set of competitive allocations. Under an additional condition ensuring that all outcomes in the core have the equal treatment property, existence of equilibrium follows from nonemptiness of the core and equivalence of the core to the set of equilibrium outcomes. Our approach provides a new technique for showing existence of equilibrium in economies with a continuum of agents.

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Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number mwooders-98-06.

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Length: 44 pages
Date of creation: 11 May 1998
Date of revision:
Handle: RePEc:tor:tecipa:mwooders-98-06

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Citations

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Cited by:
  1. Conley, John P. & Konishi, Hideo, 2002. "Migration-proof Tiebout equilibrium: existence and asymptotic efficiency," Journal of Public Economics, Elsevier, Elsevier, vol. 86(2), pages 243-262, November.
  2. Hideo Konishi, 2006. "Tiebout's Tale in Spatial Economies: Entrepreneurship, Self-Selection, and Efficiency," Boston College Working Papers in Economics, Boston College Department of Economics 655, Boston College Department of Economics, revised 03 Jan 2008.
  3. Hideo Konishi, 2009. "Efficient Mixed Clubs: Nonlinear-Pricing Equilibria with Entrepreneurial Managers," Boston College Working Papers in Economics, Boston College Department of Economics 710, Boston College Department of Economics, revised 08 Sep 2009.

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