Migration-Proof Tiebout Equilibrium: Existence and Asymptotic Efficiency

University of Illinois, Department of Economics Working Paper No. 99-0107

Posted: 19 May 1999

See all articles by John P. Conley

John P. Conley

Vanderbilt University - College of Arts and Science - Department of Economics

Hideo Konishi

Boston College - Department of Economics

Date Written: May 1999

Abstract

Tiebout's basic claim was that when public goods are local, competition between jurisdictions solves the free riding problem in the sense that equilibria exist and are always Pareto efficient. Unfortunately, the literature does not quite support this conjecture. For finite economies, one must choose between notions of Tiebout equilibrium which are Pareto optimal but which may be empty, or which are nonempty but may be inefficient. This paper introduces a new equilibrium notion called migration-proof Tiebout equilibrium which we argue is a natural refinement of Nash equilibrium for a multijusrisdictional environment. We show for sufficiently large economies with homogeneous consumers, such an equilibrium always exists, is unique, and is asymptotically Pareto efficient.

JEL Classification: H41

Suggested Citation

Conley, John P. and Konishi, Hideo, Migration-Proof Tiebout Equilibrium: Existence and Asymptotic Efficiency (May 1999). University of Illinois, Department of Economics Working Paper No. 99-0107, Available at SSRN: https://ssrn.com/abstract=163757

John P. Conley (Contact Author)

Vanderbilt University - College of Arts and Science - Department of Economics ( email )

Box 1819 Station B
Nashville, TN 37235
United States

Hideo Konishi

Boston College - Department of Economics ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
617-552-1209 (Phone)
617-552-2308 (Fax)

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