The segregative properties of endogenous jurisdictions formation with a welfarist central government
AbstractThis paper examines the segregative properties of endogenous processes of jurisdiction formation ÃƒÂƒÃ‚Â la Tiebout in the presence of a central government who makes equalization transfers to jurisdictions in such a way as to maximize a welfarist objective. Choice of location by households, of local public good provision by jurisdictions, and of equalization grants and tax by the central government are assumed to be made simultaneously, taking the choices of others as given. Two welfarist objectives for the central government are considered in turn: Leximin and Utilitarianism. If the central government pursues a Leximin objective, it is easily shown that the only stable jurisdiction structures that can emerge are those in which the jurisdictions' poorest households have all the same wealth. A richer class of stable jurisdiction structures are compatible with a central utilitarian government. Yet, it so happens that, if individual preferences are additively separable, the class of households preferences that garantee the segregation of any stable jurisdiction structure remains unchanged by the presence of a central government.
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Bibliographic InfoPaper provided by Institute of Public Policy and Public Choice - POLIS in its series POLIS Working Papers with number 121.
Length: 32 pages
Date of creation: Mar 2009
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-22 (All new papers)
- NEP-PBE-2009-03-22 (Public Economics)
- NEP-URE-2009-03-22 (Urban & Real Estate Economics)
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