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Government By Contract

Author

Listed:
  • Donald J. Boudreaux

    (George Mason University)

  • Randall G. Holcombe

    (Florida State University)

Abstract

Many organizations have characteristics that normally are associated with govern-ments, but which are created by private contract. Neighborhood associations and condominium associations are examples. These organizations often provide public goods, have the power to tax their members, and are governed democratically. They tend to be created by an entrepreneur who creates a contractual government and then sells shares in the government along with property ownership, with the expectation that the contractual government increases the value of the associated property. Property value is enhanced because the entrepreneur produces constitutional rules, which allows subsequent purchasers to avoid the decision-making costs inherent in reaching agreement at the constitutional level.

Suggested Citation

  • Donald J. Boudreaux & Randall G. Holcombe, 1989. "Government By Contract," Public Finance Review, , vol. 17(3), pages 264-280, July.
    • Handle: RePEc:sae:pubfin:v:17:y:1989:i:3:p:264-280
    DOI: 10.1177/109114218901700302
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    References listed on IDEAS

    as
    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    2. Leland B. Yeager, 1985. "Rights, Contract, and Utility in Policy Espousal," Cato Journal, Cato Journal, Cato Institute, vol. 5(1), pages 259-294, Spring/Su.
    3. Umbeck, John, 1977. "A Theory of Contract Choice and the California Gold Rush," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 421-437, October.
    4. Gordon, Scott, 1976. "The New Contractarians," Journal of Political Economy, University of Chicago Press, vol. 84(3), pages 573-590, June.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stefano Moroni, 2014. "Towards a general theory of contractual communities: neither necessarily gated, nor a form of privatization," Chapters, in: David Emanuel Andersson & Stefano Moroni (ed.), Cities and Private Planning, chapter 3, pages 38-65, Edward Elgar Publishing.
    2. Richard Wagner, 2011. "Municipal corporations, economic calculation, and political pricing: exploring a theoretical antinomy," Public Choice, Springer, vol. 149(1), pages 151-165, October.
    3. Aligica, Paul Dragos & Tarko, Vlad, 2013. "Co-Production, Polycentricity, and Value Heterogeneity: The Ostroms’ Public Choice Institutionalism Revisited," American Political Science Review, Cambridge University Press, vol. 107(4), pages 726-741, November.
    4. Leeson, Peter T., 2011. "Government, clubs, and constitutions," Journal of Economic Behavior & Organization, Elsevier, vol. 80(2), pages 301-308.
    5. Lawrence Lai & Frank Lorne, 2014. "Ambiguous Property Rights: A Taxonomic and Exploratory Account of Post-colonial Rural Housing in Chinese Hong Kong," Urban Studies, Urban Studies Journal Limited, vol. 51(10), pages 2052-2067, August.
    6. Randall G. Holcombe, 1990. "Growth Management in Florida: Lessons for the National Economy," Cato Journal, Cato Journal, Cato Institute, vol. 10(1), pages 109-125, Spring/Su.
    7. Dwight R. Lee, 1999. "In Defense of Excessive Government," Southern Economic Journal, John Wiley & Sons, vol. 65(4), pages 674-690, April.
    8. Heine, Klaus, 2006. "Interjurisdictional competition and the allocation of constitutional rights: A research note," International Review of Law and Economics, Elsevier, vol. 26(1), pages 33-41, March.

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