Tiebout's tale in spatial economies: Entrepreneurship, self-selection, and efficiency
This paper establishes the existence and efficiency of equilibrium in a local public goods economy with spatial structures by formalizing Hamilton's [Hamilton, B.W., 1975. Zoning and property taxation in a system of local governments Urban Studies 12, 205-211] elaboration of Tiebout's [Tiebout, C., 1956. A pure theory of local public expenditures. Journal of Political Economy 64, 416-424] tale. We use a well-known equilibrium concept from Rothschild and Stiglitz [Rothschild, M., Stiglitz, J.E., 1976. Equilibrium in competitive insurance markets: an essay on the economics of imperfect information. Quarterly Journal of Economics 40, 629-649] in a market with asymmetric information, and show that Hamilton's zoning policy plays an essential role in proving the existence and efficiency of equilibrium. We use an idealized large economy following Ellickson, Grodal, Scotchmer and Zame [Ellickson, B., Grodal, B., Scotchmer, S., Zame, W.R., 1999. Clubs and the market, Econometrica 67, 1185-1217] and Allouch, Conley and Wooders [Allouch, N., Conley, J.P., Wooders, M.H., The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibria, (2004), mimeograph]. Our theorem is directly applicable to the existence and efficiency of a discrete spatial approximation of mono- or multi-centric city equilibria in an urban economy with commuting time costs, even if we allow the existence of multiple qualities of (collective) residences, when externalities due to traffic congestion are not present.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999.
"Clubs and the Market,"
Econometric Society, vol. 67(5), pages 1185-1218, September.
- Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R Zame, 2003. "Clubs and the Market," Levine's Working Paper Archive 618897000000000754, David K. Levine.
- Bryan Ellickson & Birgit Grodal & Suzanne Scotchmer & William R. Zame, 1999. "Clubs and the Market," Discussion Papers 99-04, University of Copenhagen. Department of Economics.
- Mas-Colell, Andreu, 1977. "Indivisible commodities and general equilibrium theory," Journal of Economic Theory, Elsevier, vol. 16(2), pages 443-456, December.
- Sonstelie, Jon C. & Portney, Paul R., 1978. "Profit maximizing communities and the theory of local public expenditure," Journal of Urban Economics, Elsevier, vol. 5(2), pages 263-277, April.
- Konishi, Hideo, 1996. "Voting with Ballots and Feet: Existence of Equilibrium in a Local Public Good Economy," Journal of Economic Theory, Elsevier, vol. 68(2), pages 480-509, February.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Conley, John P. & Wooders, Myrna, 1996. "Taste-homogeneity of optimal jurisdictions in a Tiebout economy with crowding types and endogenous educational investment choices," Ricerche Economiche, Elsevier, vol. 50(4), pages 367-387, December.
- Berliant, M. & Fujita, M., 1990.
"Alonso'S Discrete Population Model Of Land Use: Efficient Allocations And Competitive Equilibria,"
RCER Working Papers
217, University of Rochester - Center for Economic Research (RCER).
- Berliant, Marcus & Fujita, Masahisa, 1992. "Alonso's Discrete Population Model of Land Use: Efficient Allocations and Competitive Equilibria," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 535-66, August.
- Berliant, Marcus & Konishi, Hideo, 2000.
"The endogenous formation of a city: population agglomeration and marketplaces in a location-specific production economy,"
Regional Science and Urban Economics,
Elsevier, vol. 30(3), pages 289-324, May.
- Marcus Berliant & Hideo Konishi, 2000. "The Endogenous Formation of a City: Population Agglomeration and Marketplaces in a Location-Specific Production Economy," Boston College Working Papers in Economics 451, Boston College Department of Economics.
- Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-40, May.
- Kaneko, Mamoru & Wooders, Myrna Holtz, 1986. "The core of a game with a continuum of players and finite coalitions: The model and some results," Mathematical Social Sciences, Elsevier, vol. 12(2), pages 105-137, October.
- Ellickson, Bryan, 1979. "Competitive equilibrium with local public goods," Journal of Economic Theory, Elsevier, vol. 21(1), pages 46-61, August.
- Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
- Mas-Colell, Andreu, 1980. "Efficiency and Decentralization in the Pure Theory of Public Goods," The Quarterly Journal of Economics, MIT Press, vol. 94(4), pages 625-41, June.
- Wooders, Myrna, 1980. "The Tiebout Hypothesis: Near Optimality in Local Public Good Economies," Econometrica, Econometric Society, vol. 48(6), pages 1467-85, September.
- Buchanan, James M. & Goetz, Charles J., 1972. "Efficiency limits of fiscal mobility: An assessment of the tiebout model," Journal of Public Economics, Elsevier, vol. 1(1), pages 25-43, April.
- Pauly, Mark V., 1976. "A model of local government expenditure and tax capitalization," Journal of Public Economics, Elsevier, vol. 6(3), pages 231-242, October.
- Wheaton, William C., 1975. "Consumer mobility and community tax bases : The financing of local public goods," Journal of Public Economics, Elsevier, vol. 4(4), pages 377-384, November.
- Berliant, Marcus, 1985. "Equilibrium models with land : A criticism and an alternative," Regional Science and Urban Economics, Elsevier, vol. 15(2), pages 325-340, June.
- John P. Conley & Myrna Holtz Wooders, 1998. "The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibrium," Working Papers mwooders-98-06, University of Toronto, Department of Economics.
- James M. Buchanan & Richard E. Wagner, 1970. "An Efficiency Basis for Federal Fiscal Equalization," NBER Chapters, in: The Analysis of Public Output, pages 139-162 National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:38:y:2008:i:5:p:461-477. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.