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The segregative properties of endogenous jurisdictions formation with a welfarist central government

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  • Biswas, Rongili

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  • Gravel, Nicolas
  • Oddou, Rémy

Abstract

This paper examines the segregative properties of endogenous processes of jurisdiction formation àla Tiebout in the presence of a central government who makes equalization transfers to jurisdictions in such a way as to maximize a welfarist objective. Choice of location by households, of local public good provision by jurisdictions, and of equalization grants and tax by the central government are assumed to be made simultaneously, taking the choices of others as given. Two welfarist objectives for the central government are considered in turn: Leximin and Utilitarianism. If the central government pursues a Leximin objective, it is easily shown that the only stable jurisdiction structures that can emerge are those in which the jurisdictions' poorest households have all the same wealth. A richer class of stable jurisdiction structures are compatible with a central utilitarian government. Yet, it so happens that, if individual preferences are additively separable, the class of households preferences that garantee the segregation of any stable jurisdiction structure remains unchanged by the presence of a central government.

Suggested Citation

  • Biswas, Rongili & Gravel, Nicolas & Oddou, Rémy, 2009. "The segregative properties of endogenous jurisdictions formation with a welfarist central government," POLIS Working Papers 121, Institute of Public Policy and Public Choice - POLIS.
  • Handle: RePEc:uca:ucapdv:121
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    File URL: http://polis.unipmn.it/pubbl/RePEc/uca/ucapdv/biswas134.pdf
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    References listed on IDEAS

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    1. Gravel, Nicolas & Thoron, Sylvie, 2007. "Does endogenous formation of jurisdictions lead to wealth-stratification?," Journal of Economic Theory, Elsevier, vol. 132(1), pages 569-583, January.
    2. Gravel, Nicolas & Poitevin, Michel, 2006. "The progressivity of equalization payments in federations," Journal of Public Economics, Elsevier, vol. 90(8-9), pages 1725-1743, September.
    3. Demange, Gabrielle, 1994. "Intermediate preferences and stable coalition structures," Journal of Mathematical Economics, Elsevier, vol. 23(1), pages 45-58, January.
    4. Deschamps, Robert & Gevers, Louis, 1978. "Leximin and utilitarian rules: A joint characterization," Journal of Economic Theory, Elsevier, vol. 17(2), pages 143-163, April.
    5. 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.
    6. Sen, Amartya K, 1977. "Social Choice Theory: A Re-examination," Econometrica, Econometric Society, vol. 45(1), pages 53-89, January.
    7. 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.
    8. Sen, Amartya K, 1977. "On Weights and Measures: Informational Constraints in Social Welfare Analysis," Econometrica, Econometric Society, vol. 45(7), pages 1539-1572, October.
    9. Greenberg, Joseph & Weber, Shlomo, 1986. "Strong tiebout equilibrium under restricted preferences domain," Journal of Economic Theory, Elsevier, vol. 38(1), pages 101-117, February.
    10. 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.
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    Cited by:

    1. Gravel, Nicolas & Oddou, Rémy, 2014. "The segregative properties of endogenous jurisdiction formation with a land market," Journal of Public Economics, Elsevier, vol. 117(C), pages 15-27.
    2. Remy Oddou, 2017. "Welfarism and segregation in endogenous jurisdiction formation models," EconomiX Working Papers 2017-43, University of Paris Nanterre, EconomiX.
    3. 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.
    4. Remy Oddou, 2017. "The effect of a local allowance on the endogenous formation of jurisdictions," EconomiX Working Papers 2017-42, University of Paris Nanterre, EconomiX.
    5. Remy Oddou, 2015. "Firms location and sorting," Economics Bulletin, AccessEcon, vol. 35(3), pages 1782-1787.

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