Existence of Equilibrium and Stratification in Local and Hierarchical Tiebout Economies with Property Taxes and Voting
We present the first fully closed general equilibrium model of hierarchical and local public goods economies with the following features: (i) multiple agent types who are endowed with both some amount of private good (income) and a house, who are mobile between houses and jurisdictions, and who vote in local and national elections; (ii) multiple communities that finance a local public good through property taxes which are set in accordance with absolute majority rule; and (iii) a national government that produces a national public good financed through an income tax whose level is determined through majority rule voting. In contrast to previous models, no overly restrictive assumptions on preferences and technologies are required to prove the existence of an equilibrium in the presence of property taxation and voting. Thus, the existence of an equilibrium is proved without any of the major restrictions used in the past, and sufficient conditions for stratification of agents into communities based on their public good preferences and their wealth levels are found. This model lays the groundwork for a positive applied analysis of local public finance and intergovernmental relations. It furthermore builds the foundation for a parameterized computable general equilibrium model of local public goods and fiscal federalism that is used elsewhere to analyze a variety of policy issues.
|Date of creation:||Jan 1996|
|Publication status:||published as Nechyba, Thomas J. "Existence Of Equilibrium And Stratification In Local And Hierarchical Tiebout Economies With Property Taxes And Voting," Econometric Theory, 1997, v10(2), 277-304.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
Web page: http://www.nber.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nechyba, Thomas J, 1997.
"Local Property and State Income Taxes: The Role of Interjurisdictional Competition and Collusion,"
Journal of Political Economy,
University of Chicago Press, vol. 105(2), pages 351-384, April.
- Thomas J. Nechyba, 1996. "Local Property and State Income Taxes: The Role of Interjurisdictional Competition and Collusion," NBER Working Papers 5419, National Bureau of Economic Research, Inc.
- Epple, Dennis & Filimon, Radu & Romer, Thomas, 1993. "Existence of voting and housing equilibrium in a system of communities with property taxes," Regional Science and Urban Economics, Elsevier, vol. 23(5), pages 585-610, November.
- Greenberg, Joseph, 1979. "Consistent Majority Rules over Compact Sets of Alternatives," Econometrica, Econometric Society, vol. 47(3), pages 627-636, May.
- Denzau, Arthur T & Parks, Robert P, 1975. "The Continuity of Majority Rule Equilibrium," Econometrica, Econometric Society, vol. 43(5-6), pages 853-866, Sept.-Nov.
- Denzau, Arthur T. & Parks, Robert P., 1983. "Existence of voting-market equilibria," Journal of Economic Theory, Elsevier, vol. 30(2), pages 243-265, August.
- Bewley, Truman F, 1981. "A Critique of Tiebout's Theory of Local Public Expenditures," Econometrica, Econometric Society, vol. 49(3), pages 713-740, May.
- Konishi, Hideo, 1996. "Voting with Ballots and Feet: Existence of Equilibrium in a Local Public Good Economy," Journal of Economic Theory, Elsevier, vol. 68(2), pages 480-509, February.
- Ellickson, Bryan, 1979. "Competitive equilibrium with local public goods," Journal of Economic Theory, Elsevier, vol. 21(1), pages 46-61, August.
- Greenberg, Joseph, 1983. "Local public goods with mobility: Existence and optimality of a general equilibrium," Journal of Economic Theory, Elsevier, vol. 30(1), pages 17-33, June.
- Epple, D. & Platt, G.J., 1992. "Equilibrium Among Jurisdictions When Households Differ by Preferences and Income," GSIA Working Papers 1992-08, Carnegie Mellon University, Tepper School of Business.
- Westhoff, Frank, 1977. "Existence of equilibria in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 14(1), pages 84-112, February.
- Krelove, R., 1993. "The persistence and inefficiency of property tax finance of local public expenditures," Journal of Public Economics, Elsevier, vol. 51(3), pages 415-435, July.
- Greenberg, Joseph, 1977. "Existence of an equilibrium with arbitrary tax schemes for financing local public goods," Journal of Economic Theory, Elsevier, vol. 16(2), pages 137-150, December.
- Rose-Ackerman, Susan, 1979. "Market models of local government: Exit, voting, and the land market," Journal of Urban Economics, Elsevier, vol. 6(3), pages 319-337, July.
- Greenberg, Joseph & Shitovitz, Benyamin, 1988. "Consistent voting rules for competitive local public goods economies," Journal of Economic Theory, Elsevier, vol. 46(2), pages 223-236, December.
- Berliant, Marcus, 1985. "Equilibrium models with land : A criticism and an alternative," Regional Science and Urban Economics, Elsevier, vol. 15(2), pages 325-340, June.
- Eric A. Hanushek & John M. Quigley, 1978. "An Explicit Model of Intra-Metropolitan Mobility," Land Economics, University of Wisconsin Press, vol. 54(4), pages 411-429.
- Henderson, J. Vernon, 1991. "Separating Tiebout equilibria," Journal of Urban Economics, Elsevier, vol. 29(1), pages 128-152, January.
- Mamoru Kaneko, 1980. "Housing Market with Indivisibility," Cowles Foundation Discussion Papers 571, Cowles Foundation for Research in Economics, Yale University.
- Slutsky, Steven, 1977. "A voting model for the allocation of public goods: Existence of an equilibrium," Journal of Economic Theory, Elsevier, vol. 14(2), pages 299-325, April.
- Wooders, Myrna, 1978. "Equilibria, the core, and jurisdiction structures in economies with a local public good," Journal of Economic Theory, Elsevier, vol. 18(2), pages 328-348, August. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:nbr:nberte:0190. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.