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A Tiebout theory of public vs private provision of collective goods

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  • Glomm, Gerhard
  • Lagunoff, Roger

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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  • Glomm, Gerhard & Lagunoff, Roger, 1998. "A Tiebout theory of public vs private provision of collective goods," Journal of Public Economics, Elsevier, vol. 68(1), pages 91-112, April.
    • Handle: RePEc:eee:pubeco:v:68:y:1998:i:1:p:91-112
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    3. Kira Boerner & Silke Uebelmesser, 2007. "Migration and the welfare state: The economic power of the non-voter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 14(1), pages 93-111, February.
    4. K. Mccarthy & F. 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.
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    7. Kjell Hausken & John F. Knutsen, 2002. "The Birth, Adjustment and Death of States," Public Economics 0205004, University Library of Munich, Germany.
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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