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A Tiebout Theory of Public vs Private Provision of Collective Goods

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  • Roger Lagunoff

    (Georgetown University)

  • Gerhard Glomm

    (Michigan State University)

Abstract

We study whether "coercive" public provision or voluntary private provision of public goods can survive when individuals who "vote with their feet" can choose between communities that differ in the way that public goods are provided. We obtain the following findings: (i) an equilibrium always exists in which all individuals to the community which uses voluntary provision; (ii) under very robust conditions on preferences and income distribution, an equilibrium exists in which all individuals migrate to the community which uses coercive provision; (iii) "interior" equilibria in which collections of individuals move to both communities exist when income distribution is sufficiently polarized. Such equilibria are shown to be stratified -- richer individuals migrate to the community with voluntary provision while poorer individuals reside in the public provision community. In the case where there are two types of wealth endowments, existence of stratified equilibria seems to require a negative tradeoff between the wealth ratio of the rich to the poor and the numerical ratio of rich to poor in society.

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Bibliographic Info

Paper provided by EconWPA in its series Game Theory and Information with number 9707008.

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Date of creation: 05 Jul 1997
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Handle: RePEc:wpa:wuwpga:9707008

Note: Type of Document - LaTex; prepared on IBM PC ; to print on HP;
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Web page: http://128.118.178.162

Related research

Keywords: Tiebout migration; public provision; private provision; viable mechanisms; interior equilibria; stratification;

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  1. Besley, Timothy & Coate, Stephen, 1991. "Public Provision of Private Goods and the Redistribution of Income," American Economic Review, American Economic Association, vol. 81(4), pages 979-84, September.
  2. Scotchmer, Suzanne & Wooders, Myrna Holtz, 1987. "Competitive equilibrium and the core in club economies with anonymous crowding," Journal of Public Economics, Elsevier, vol. 34(2), pages 159-173, November.
  3. Bergstrom, Ted C, 1979. " When Does Majority Rule Supply Public Goods Efficiently?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 216-26.
  4. Dan Usher, 1976. "The Welfare Economics of the Socialization of Commodities," Working Papers 218, Queen's University, Department of Economics.
  5. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  6. Jean-Jacques Laffont, 1988. "Fundamentals of Public Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121271, January.
  7. Caplin, Andrew & Nalebuff, Barry, 1992. "Individuals and Institutions," American Economic Review, American Economic Association, vol. 82(2), pages 317-22, May.
  8. Gensemer, Susan & Hong, Lu & Kelly, Jerry S., 1996. "Division Rules and Migration Equilibria," Journal of Economic Theory, Elsevier, vol. 69(1), pages 104-116, April.
  9. Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
  10. Greenberg, Joseph, 1983. "Local public goods with mobility: Existence and optimality of a general equilibrium," Journal of Economic Theory, Elsevier, vol. 30(1), pages 17-33, June.
  11. Bergstrom, Theodore & Blume, Lawrence & Varian, Hal, 1986. "On the private provision of public goods," Journal of Public Economics, Elsevier, vol. 29(1), pages 25-49, February.
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Cited by:
  1. Börner, Kira & Uebelmesser, Silke, 2005. "Migration and the Welfare State: The Economic Power of the Non-Voter?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 154, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. Kjell Hausken & John F. Knutsen, 2004. "An Enabling Mechanism for the Creation, Adjustment, and Dissolution of States and Governmental Units," Public Economics 0409011, EconWPA.
  3. IgnatiusJ. Horstmann & KimberleyA. Scharf, 2008. "A Theory of Distributional Conflict, Voluntarism and Segregation," Economic Journal, Royal Economic Society, vol. 118(527), pages 427-453, 03.
  4. Giorgio Coricelli & Dietmar Fehr & Gerlinde Fellner, 2003. "Partner selection in public goods experiments," Papers on Strategic Interaction 2003-13, Max Planck Institute of Economics, Strategic Interaction Group.
  5. Killian J. McCarthy & Frederik van Doorn & B. Unger, 2008. "Globalisation, Tax Competition and the Harmonisation of Corporate Tax Rates in Europe: A Case of Killing the Patient to Cure the Disease?," Working Papers 08-13, Utrecht School of Economics.
  6. Kjell Hausken & John F. Knutsen, 2002. "The Birth, Adjustment and Death of States," Public Economics 0205004, EconWPA.

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