A Tiebout Theory of Public vs Private Provision of Collective Goods

Georgetown University Working Paper No. 97-05

22 Pages Posted: 21 Nov 1997

See all articles by Roger Lagunoff

Roger Lagunoff

Georgetown University - Department of Economics

Gerhard Glomm

Indiana University Bloomington - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: May 16, 1997

Abstract

We study whether "coercive" public provision or voluntary private provision of public goods can survive when individuals who "vote with their feet" can choose between communities that differ in the way that public goods are provided. We obtain the following findings: (i) an equilibrium always exists in which all individuals to the community which uses voluntary provision; (ii) under very robust conditions on preferences and income distribution, an equilibrium exists in which all individuals migrate to the community which uses coercive provision; (iii) "interior" equilibria in which collections of individuals move to both communities exist when income distribution is sufficiently polarized. Such equilibria are shown to be stratified -- richer individuals migrate to the community with voluntary provision while poorer individuals reside in the public provision community. In the case where there are two types of wealth endowments, existence of stratified equilibria seems to require a negative tradeoff between the wealth ratio of the rich to the poor and the numerical ratio of rich to poor in society.

JEL Classification: C72, D71, H41, H73

Suggested Citation

Lagunoff, Roger and Glomm, Gerhard, A Tiebout Theory of Public vs Private Provision of Collective Goods (May 16, 1997). Georgetown University Working Paper No. 97-05, Available at SSRN: https://ssrn.com/abstract=39975 or http://dx.doi.org/10.2139/ssrn.39975

Roger Lagunoff (Contact Author)

Georgetown University - Department of Economics ( email )

Washington, DC 20057
United States
202-687-1510 (Phone)
202-687-6102 (Fax)

Gerhard Glomm

Indiana University Bloomington - Department of Economics ( email )

Wylie Hall
Bloomington, IN 47405-6620
United States
812-855-7256 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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