Local Public Goods, Debt and Migration
Migration raises a potential free rider problem for the provision of durable local public goods if the late-comers can enjoy the public good without paying for it. Allowing communities to finance public goods by debt mitigates this problem, since future immigrants have to share the burden of the debt. However, in equilibrium there will be over-accumulation of local debt. There may be more or less public good than in first best, but conditional on the inefficiently high levels of debt there will be too few public goods. A competitive market for land reduces but does not in general eliminate the inefficiencies.
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|Date of creation:||2000|
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- Christian Schultz & Tomas Sjöström, "undated". "Local Public Goods, Debt and Migration," EPRU Working Paper Series 00-11, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
- Schultz, C. & Sjostrom, T., 2000. "Local Public Goods, Debt and Migration," Papers 6-00-1, Pennsylvania State - Department of Economics.
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- Konishi, Hideo & Weber, Shlomo & Le Breton, Michel, 1997. "Free mobility equilibrium in a local public goods economy with congestion," Research in Economics, Elsevier, vol. 51(1), pages 19-30, April.