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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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References

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Citations

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Cited by:
  1. John Conley & Hideo Konishi, 2001. "Migration-proof Tiebout equilibrium:Existence and asymptotic efficiency," Economics Bulletin, AccessEcon, vol. 28(1), pages A0.
  2. Hideo Konishi, 2010. "Efficient Mixed Clubs: Nonlinear-Pricing Equilibria With Entrepreneurial Managers," The Japanese Economic Review, Japanese Economic Association, vol. 61(1), pages 35-63.
  3. Konishi, Hideo, 2008. "Tiebout's tale in spatial economies: Entrepreneurship, self-selection, and efficiency," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 461-477, September.

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