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The effect of spillovers and congestion on the segregative properties of endogenous jurisdictions formation

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  • Rémy Oddou

    (THEMA, Universite de Cergy-Pontoise)

Abstract

This paper analyzes the e ect of spillovers and congestion of local public services on the segregative properties of endogenous formation of jurisdictions. Households choosing to live at the same place form a jurisdiction whose aim is to produce congested local public services, that can create positive spillovers to other jurisdictions. In every jurisdiction, the production of the local public services is nanced through a local tax based on households' wealth. Local wealth tax rates are democratically determined in all jurisdictions. Households also consume housing in their jurisdiction. Any household is free to leave its jurisdiction for another one that would increase its utility. A necessary and sucient condition to have every stable jurisdictions structure segregated by wealth, for a large class of congestion measures and any spillovers coecients structure, is identi ed: the public services must be either a gross substitute or a gross complement to the private good and the housing.

Suggested Citation

  • Rémy Oddou, 2011. "The effect of spillovers and congestion on the segregative properties of endogenous jurisdictions formation," THEMA Working Papers 2011-24, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2011-24
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    File URL: http://thema.u-cergy.fr/IMG/documents/2011-24.pdf
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    References listed on IDEAS

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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(5), pages 416-416.
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    More about this item

    Keywords

    Jurisdictions; Segregation; Spillovers; Congestion JEL Classi cation: C78; D02; H73; R13;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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