Tiebout sorting and competition
Abstract
Over 60 years ago, Charles Tiebout hypothesized that decentralized provision of public services (such as public schools) through local governments can result in efficient levels of such services (Tiebout, 1956). His key insight was that residential mobility of households might provide a sufficient disciplining force (analogous to typical market forces) to insure efficient provision of local public services. With sufficient local competition, there would be no room for local governments to engage in excessive political rent seeking, and enough variety in local tax and service packages would emerge to satisfy different ...
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