Introduction there is an extensive literature on the efficiency of the tiebout equilibrium and related work that investigates the feasibility of a lindahl equilibrium with local and pure public goods. Oatesthe effects of property taxes and local public spending on property values. Bewley the last section of this paper presents a rigorous version of tiebout s theory of local public goods. Charles tiebout 1956, in his work a pure theory of local expenditures, provides a vision of the workings of the local public sector, acknowledging many similarities to the features of a competitive market, however omitting any references to local taxation. Journal of urban economics 19, 356370 1986 pigou, tiebout, property taxation, and the underprovision of local public goods george r. Its present recognition, frequently attributed to originating the idea of voting with your feet, however, contrasts sharply with. Dahrendorf hypothesis and its implications for the theory. Charles tiebout a pure theory of local expenditures 1956. Seemingly, we are faced with the problem of having a. The two writers agree on what is probably the major point under investigation, namely. Tiebout, charles 1956 a pure theory of local expenditures, the journal of political economy. In this article, we seek to shed light on the microfoundations of the tiebout model.
Access to the online full text or pdf requires a subscription. View citations in econpapers 2400 track citations by rss feed. An extension of the tiebout hypothesis of voting with ones. This rigorous theory follows closely the more rigorous part of tiebouts work. If the inline pdf is not rendering correctly, you can download the pdf file here. Bewley, a critique of tiebouts theory of local public expenditures, econometrica, 1981, 49, 3, 740. Tiebout northwestern university ne of the most important recent developments in the area of applied economic theory has been the work of musgrave and samuel son in public finance theory. True expression of citizen preferences, thus optimal public goods provision thus optimal taxation x. The tiebout model, also known as tiebout sorting, tiebout migration, or tiebout hypothesis, is a positive political theory model first described by economist charles tiebout in his article a pure theory of local expenditures 1956. Just a year later, he supplemented this theory by an equivalent diagrammatic formulation and a few clarifying comments samuelson 1955. Of course, this study is only preliminary, and one could easily make an argument that. Proin gravida dolor sit amet lacus accumsan et viverra justo commodo. The distance between buchanans an economic theory of. Working papers journal articles books and chapters software components.
An empirical study of tax capitalization and the tiebout hypothesis journal of political economy, 77 1969, pp. Tiebout, a pure theory of local expenditures, 1956. Lorem ipsum dolor sit amet, consectetur adipiscing elit. State local relations are examined as a potential constraint on the operation of this aspect of tiebout s model. Tiebout 1956, jpe a pure theory of local expenditures. It is shown that equilibria exist and are pareto optimal. Firm location in a tiebout world, journal of regional.
A search for testable implications of the tiebout hypothesis. A pure theory of local expenditures, journal of political economy local governments compete for their tax base theoretical piece endorsing decentralization theory has initiated debates about fiscal federalism and the proper roles of. Boadway, on the method of taxation and the provision of local public goods. This paper asks, under what conditions can the fundamental theorem of welfare economics be extended to economies with local public goods. This article introduces buchanans comment on tiebouts a pure theory of local public expenditures. Tiebouts 1956 a pure theory of local expenditures and vincent ostrom, charles m.
The gross housing price p j, local public good level g j, and household numeraire consumption. The idea that heterogeneity in economic policy may be useful entered neoclassical economics as early as 1956, with the seminal paper on a pure theory of local expenditures by charles m. Advanced photonics journal of applied remote sensing. A critique of tiebouts theory of local public expenditures. Bewley the last section of this paper presents a rigorous version of tiebouts theory of local public goods. The results suggest that, at least in the case of elementary and secondary education, when allowed to choose from a selection of jurisdictions, individuals locate so as to minimize the allocative. This paper has presented an indirect test of the tiebout hypothesis that does not require explicit consideration of the interaction between the markets for housing and local public services.
Statelocal relations are examined as a potential constraint on the operation of this aspect of tiebouts model. Therefore, neither expenditures nor taxes should have any relation to. Therefore, neither expenditures nor taxes should have any relation to the taxed commoditys housings market price. Usually, it is claimed that buchanan modeled tiebout s insights, that there exists a buchanan tiebout hypothesis, and that buchanan in 1965 complemented what.
Assessing the microfoundations of the tiebout model. A pure theory of local expenditures journal of political. Bewley, a critique of tiebout s theory of local public expenditures, econometrica, 49, 7740 1981. He highlighted the market failure of freeriding when he wrote. Introducing local property tax for fiscal decentralization. To provide a formal description of equilibrium in the tiebout case, begin with the third stage.
Diagrammatic exposition of a theory of public expenditure paul a. A substantial and diverse literature in economics traces its intellectual roots to charles tiebouts 1956 article, the pure theory of local expenditure. The distance between buchanans an economic theory of clubs. Except for sax, wicksell, lindahl, musgrave, and bowen, economists have rather neglected the theory of optimal public expenditure, spending most of their energy on the theory of taxation. This study empirically extends the tiebout hypothesis of voting with ones feet in two ways. The case of greater porto, conference paper, cabo verde resdes e desenvolvimento regional, june 9. Samuelson presented on just two and a half pages what he claimed to be a pure theory of government expenditure on collective consumption goods 1954c, p. Indeed, tiebouts a pure theory of local expenditure 1956, penned as a qualification to samuelson 1954, failed to influence the. The tiebout hypothesis is that individuals reveal their preferences for high or low public services and related highlow taxes by voting with their feet.
The tiebout hypothesis the political theory model by charles tiebout that, under ideal circumstances, people will reveal their preferences for municipal public goods by voting with their feet. The analogy between competition among firms in providing private goods and competition among jurisdictions in providing local public goods is central to the economic study of local public finance tiebout, 1956. Second, in addition to investigating variables reflecting public education outlays, property taxation and income taxation, it investigates whether migrants are. In 1954 paul samuelson published his landmark paper the pure theory of public expenditure, which formalized the concept of public goods which he called collective consumption goods i.
Do families sort according to preferences for locational. We use a survey of respondents in four of the largest united states metropolitan areas to analyze factors that contribute to households exiting behavior. Fifty years after samuelsons the pure theory of public. This study provides a preliminary empirical investigation as to whether blackconsumer voters were attracted by the prospect of higher afdc benefits as they made interstate migration decisions over the 197075 time period. A pure theory of local expenditures, journal of political economy. The essence of the tiebout hypothesis is that there exists a mechanism for preference revelation regarding. Second, in addition to investigating variables reflecting public education outlays, property taxation and income taxation, it investigates whether migrants are attracted to states with higher medicaid benefits per.
Sorting charles tiebout american economic association. A twostage hedonic price analysis in california, forest policy and economics, elsevier, vol. Society for the advancement of economic theory saet, vol. Its present recognition, frequently attributed to originating the idea of voting with your feet, however, contrasts sharply with its obscurity during tiebouts academic career. Introduction there is an extensive literature on the efficiency of the tiebout equilibrium and related work that investigates the feasibility of a. An economic theory of fiscal decentralization, in nber, public finances. The effects of property taxes and local public spending on. The obvious application the one both tiebout and his followers had in mind is that of a large number of autonomous suburban jurisdictions providing those goods which are generally in the domain of local governments, such a primary and secondary education, police. Usually, it is claimed that buchanan modeled tiebouts insights, that there exists a buchanantiebout hypothesis, and that buchanan in 1965 complemented what. The obvious application the one both tiebout and his followers had in mind is that of a large number of autonomous suburban jurisdictions providing those goods which are generally in the domain of local governments, such a primary and secondary education, police and fire protection, sewer and water provision. Competition among jurisdictions results in homogeneous communities, with residents that all value public services similarly, such that, in equilibrium, no individual can. Unlike most previous studies, there was no compelling evidence of such a attraction. Citizens select a local government by moving voting with your feet a response to earlier works by separately samuelson and musgrave.
This item may be available elsewhere in econpapers. Tiebout 0 northwestern university ne of the most important recent developments in the area of applied economic theory has been the work of musgrave and samuel son in public finance thery. An extension of the tiebout hypothesis of voting with one. First, it provides updated estimates using net migration data for the period 20002008. Zodrow and peter mieszkowski department of economics, rice university, houston, texas 77251 received june 15,1984. Pdf a pure theory of local expenditures semantic scholar. This idea, which traces back to charles tiebouts influential 1956 article on public finance, a pure theory of local expenditures,1 is regularly invoked by legal scholars to argue for devolving authority to decentralized local governments. Fernandes 2009, the tiebout hypothesis and local governments specialization. Charles tiebout a pure theory of local expenditures 1956 the tiebout model some from polisci 715 at duke university. Readings planning economics urban studies and planning. Ne of the most important recent developments in the area of applied economic theory has been the work of musgrave and samuelson in public finance theory. Pigou, tiebout, property taxation, and the underprovision of. Competition among jurisdictions results in homogeneous communities, with residents that all value public services similarly, such that, in equilibrium, no individual can be made better off.
It helps us to understand the nature of the relationship between buchanan and tiebout. The basic idea is that household mobility will induce jurisdictions to provide efficient mixes of local public goods and taxes or. Pdf tiebouts theorymodel on local public goods researchgate. In theory, sorting results in an efficient provision of public goods as local governments compete to. Conference proceedings papers presentations journals. Pigou, tiebout, property taxation, and the underprovision.
Firm location in a tiebout world firm location in a tiebout world mcguire, therese 19830501 00. Proceedings of a conference held by the international economic association at turin, italymacmillan. Therefore, i explicitly assume two categories of goods. Charles tiebout a pure theory of local expenditures 1956 the. This rigorous theory follows closely the more rigorous part of tiebout s work. Tiebout and robert warrens 1961 the organization of government in metropolitan areas. Inefficiencies from metropolitan political and fiscal. Journal of political economy eres optional reading eugene bardach. Tiebout writes of consumervoters but we use the more. True expression of citizen preferences, thus optimal. Feb 09, 2016 this article introduces buchanans comment on tiebout s a pure theory of local public expenditures.