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Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate

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  • John D. Donahue

Abstract

The market metaphor of intergovernmental choice as a spur to efficiency (formalized by Charles M. Tiebout) is often invoked to support the shift away from Washington and toward the states. But the model translates badly to governments; governmental entry and exit is costly. Public-sector co11usion often serves citizens' interests. Heterogeneous mobility distorts the signals sent by interstate migration. And while Tiebout (and followers) condition efficiency predictions on optimal distribution, the U.S. devolution movement coincides with rising inequality and has gone furthest where distribution matters most. The metaphor is misapplied. Devolution will likely do more to enfeeble government than to improve it.

Suggested Citation

  • John D. Donahue, 1997. "Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 73-81, Fall.
  • Handle: RePEc:aea:jecper:v:11:y:1997:i:4:p:73-81
    Note: DOI: 10.1257/jep.11.4.73
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    References listed on IDEAS

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
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    3. Edward M. Gramlich & Deborah S. Laren, 1984. "Migration and Income Redistribution Responsibilities," Journal of Human Resources, University of Wisconsin Press, vol. 19(4), pages 489-511.
    4. D.N. Saxena, 1989. "Foreign Direct Investment," Foreign Trade Review, , vol. 24(1), pages 76-97, April.
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    6. Cebula, Richard J, 1990. "A Brief Empirical Note on the Tiebout Hypothesis and State Income Tax Policies," Public Choice, Springer, vol. 67(1), pages 87-89, October.
    7. Carpenter, Vivian L., 1991. "The influence of political competition on the decision to adopt GAAP," Journal of Accounting and Public Policy, Elsevier, vol. 10(2), pages 105-134.
    8. P.J. Grossman, 1989. "Fiscal Competition Among States in Australia: the Demise of Death Duties," Economics Discussion / Working Papers 89-01, The University of Western Australia, Department of Economics.
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    Cited by:

    1. Keith Brouhle & Jay Corrigan & Rachel Croson & Martin Farnham & Selhan Garip & Luba Habodaszova & Laurie Tipton Johnson & Martin Johnson & David Reiley, 2005. "Local Residential Sorting and Public Goods Provision: A Classroom Demonstration," The Journal of Economic Education, Taylor & Francis Journals, vol. 36(4), pages 332-341, October.
    2. Saving, Jason L., 1999. "Migration, labor-leisure choice, and Pareto suboptimal redistribution," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 559-573, September.
    3. William R. Eadington, 1999. "The Economics of Casino Gambling," Journal of Economic Perspectives, American Economic Association, vol. 13(3), pages 173-192, Summer.
    4. Olga Lucía Acosta N. & Israel Fainboim & Catalina Gutiérrez S. & Blanca Cecilia Zuluaga D., 1999. "Relaciones fiscales entre el Distrito Especial de Bogotá y la Nación," COYUNTURA SOCIAL 013094, FEDESARROLLO.
    5. Caplan, Bryan, 2001. "When is two better than one? How federalism mitigates and intensifies imperfect political competition," Journal of Public Economics, Elsevier, vol. 80(1), pages 99-119, April.
    6. Francis Markham & Bruce Doran & Martin Young, 2014. "The Spatial Extents of Casino Catchments in Australia," Growth and Change, Wiley Blackwell, vol. 45(1), pages 60-78, March.
    7. Neyapti, Bilin, 2010. "Fiscal decentralization and deficits: International evidence," European Journal of Political Economy, Elsevier, vol. 26(2), pages 155-166, June.
    8. Kraybill, David S. & Lobao, Linda, 2001. "The Emerging Roles of County Governments in Rural America: Findings from a Recent National Survey," 2001 Annual meeting, August 5-8, Chicago, IL 20697, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Bruce G. Carruthers & Naomi R. Lamoreaux, 2016. "Regulatory Races: The Effects of Jurisdictional Competition on Regulatory Standards," Journal of Economic Literature, American Economic Association, vol. 54(1), pages 52-97, March.
    10. Andrea Robbett, 2016. "Community dynamics in the lab," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(3), pages 543-568, March.

    More about this item

    JEL classification:

    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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