A Tiebout Theory of Public vs Private Provision of Collective Goods

The Journal of Public Economics

Posted: 26 May 1998

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)

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Abstract

NOTE: The following is a description of the paper and not the actual abstract.

We study whether compulsory 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 aways exists in which all individuals migrate 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. The Journal of Public Economics, Available at SSRN: https://ssrn.com/abstract=92368

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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