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Local Residential Sorting and Public Goods Provision: A Classroom Demonstration

  • Keith Brouhle
  • Jay Corrigan
  • Rachel Croson
  • Martin Farnham
  • Selhan Garip
  • Luba Habodaszova
  • Laurie Tipton Johnson
  • Martin Johnson
  • David Reiley

This classroom exercise illustrates the Tiebout (1956) hypothesis that residential sorting across multiple jurisdictions leads to a more efficient allocation of local public goods. The exercise places students with heterogeneous preferences over a public good into a single classroom community. A simple voting mechanism determines the level of public good provision in the community. Next, the classroom is divided in two, and students may choose to move between the two smaller communities, sorting themselves according to their preferences for public goods. The exercise places cost on movement at first, then allows for costless sorting. Students have the opportunity to observe how social welfare rises through successive rounds of the exercise, as sorting becomes more complete. They may also observe how immobile individuals can become worse off because of incomplete sorting when the Tiebout assumptions do not hold perfectly.

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File URL: http://hdl.handle.net/10.3200/JECE.36.4.332-344
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Article provided by Taylor & Francis Journals in its journal The Journal of Economic Education.

Volume (Year): 36 (2005)
Issue (Month): 4 (October)
Pages: 332-341

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Handle: RePEc:taf:jeduce:v:36:y:2005:i:4:p:332-341
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  1. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July.
  2. Brueckner, Jan K., 2000. "A Tiebout/tax-competition model," Journal of Public Economics, Elsevier, vol. 77(2), pages 285-306, August.
  3. Kollman, Ken & Miller, John H & Page, Scott E, 1997. "Political Institutions and Sorting in a Tiebout Model," American Economic Review, American Economic Association, vol. 87(5), pages 977-92, December.
  4. Theodore Groves & John O. Ledyard, 1976. "Some Limitations of Demand Revealing Processes," Discussion Papers 219, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Rubinfeld, Daniel L & Shapiro, Perry & Roberts, Judith, 1987. "Tiebout Bias and the Demand for Local Public Schooling," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 426-37, August.
  6. Edward Clarke, 1971. "Multipart pricing of public goods," Public Choice, Springer, vol. 11(1), pages 17-33, September.
  7. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  8. Mieszkowski, Peter & Zodrow, George R, 1989. "Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1098-1146, September.
  9. 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.
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