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Trade in a Tiebout Economy

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  • Wilson, John Douglas

Abstract

Trade in a Tiebout EconomyThis paper explores both the positive and normative aspects of interregional commodity trade in a "Tiebout e conomy," i.e., a many-region economy with perfect labor mobility and endogenous government decision making. For a model with scale econom ies in public good consumption, it is shown that any equilibrium is a symmetric; regions containing the same types of individuals and production possibilities nevertheless differ in the traded goods which they produce and the public-good levels which they provide residents. In fact, each region specializes in producing only one of the traded private goods. The paper proves that an equilibrium is Pareto efficient. Copyright 1987 by American Economic Association.

Suggested Citation

  • Wilson, John Douglas, 1987. "Trade in a Tiebout Economy," American Economic Review, American Economic Association, vol. 77(3), pages 431-441, June.
  • Handle: RePEc:aea:aecrev:v:77:y:1987:i:3:p:431-41
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    1. Fredriksson, Per G. & List, John A. & Millimet, Daniel L., 2004. "Chasing the smokestack: strategic policymaking with multiple instruments," Regional Science and Urban Economics, Elsevier, vol. 34(4), pages 387-410, July.
    2. Wellisch, Dietmar & Walz, Uwe, 1998. "Why do rich countries prefer free trade over free migration? The role of the modern welfare state," European Economic Review, Elsevier, vol. 42(8), pages 1595-1612, September.
    3. Wildasin, David E. & Wilson, John Douglas, 1996. "Imperfect mobility and local government behaviour in an overlapping-generations model," Journal of Public Economics, Elsevier, vol. 60(2), pages 177-198, May.
    4. Ezcurra, Roberto, 2007. "Is there cross-country convergence in carbon dioxide emissions?," Energy Policy, Elsevier, vol. 35(2), pages 1363-1372, February.
    5. Fredriksson, Per G. & Millimet, Daniel L., 2002. "Is there a 'California effect' in US environmental policymaking?," Regional Science and Urban Economics, Elsevier, vol. 32(6), pages 737-764, November.
    6. Epple, Dennis & Platt, Glenn J., 1998. "Equilibrium and Local Redistribution in an Urban Economy when Households Differ in both Preferences and Incomes," Journal of Urban Economics, Elsevier, vol. 43(1), pages 23-51, January.
    7. Johannesen, Niels, 2010. "Imperfect tax competition for profits, asymmetric equilibrium and beneficial tax havens," Journal of International Economics, Elsevier, vol. 81(2), pages 253-264, July.
    8. Mazza, Isidoro & van Winden, Frans, 1996. "A Political Economic Analysis of Labor Migration and Income Redistribution," Public Choice, Springer, vol. 88(3-4), pages 333-363, September.
    9. Fredriksson, Per G. & Millimet, Daniel L., 2002. "Strategic Interaction and the Determination of Environmental Policy across U.S. States," Journal of Urban Economics, Elsevier, vol. 51(1), pages 101-122, January.
    10. Levinson, Arik, 1999. "NIMBY taxes matter: the case of state hazardous waste disposal taxes," Journal of Public Economics, Elsevier, vol. 74(1), pages 31-51, October.
    11. David A. Starrett, 1997. "Mobility and Capitalization in Local Public Finance: A Reassessment," Working Papers 97006, Stanford University, Department of Economics.
    12. Helsley, Robert, 2001. "An Essay on Urban Economic Theory: Yorgos Y. Papageorgiou and David Pines, Kluwer Academic Publishers, Norwell, Massachusetts, 1999, ISBN 0-7923-8343-5," Regional Science and Urban Economics, Elsevier, vol. 31(5), pages 626-630, September.
    13. Anas, Alex & Pines, David, 2008. "Anti-sprawl policies in a system of congested cities," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 408-423, September.
    14. John List, 1999. "Have Air Pollutant Emissions Converged Amongst U.S. Regions?," Natural Field Experiments 00528, The Field Experiments Website.

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