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Achieving stability in heterogeneous societies: multi-jurisdictional structures, and redistribution policies

Consider a “linear world” populated by several agents. These agents’ locations are identified with optimal variety of a horizontally differentiated local public good. Agents are to be partitioned into several communities (hereafter, groups), and each group chooses a variety of public good to be produced and consumed by members of that group via the majority voting procedure. It is shown that a stable partition may fail to exist, where stability means that no potential group would like to secede and form a new community. At the same time, compensation schemes are proposed which guarantee the existence of a stable partition. Small societies are studied in detail, as well as certain special types of distributions of agents’ locations.

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Paper provided by EERC Research Network, Russia and CIS in its series EERC Working Paper Series with number 04-13e.

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Length: 31 pages
Date of creation: 25 Dec 2004
Date of revision:
Handle: RePEc:eer:wpalle:04-13e
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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.
  2. HAIMANKO, Ori & LE BRETON , Michel & WEBER, Shlomo, 2002. "On efficiency and sustainability in a collective decision-making problem with heterogeneous agents," CORE Discussion Papers 2002072, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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