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. I offer biographical information about charles tiebout, who died in 1968, to explain the initially modest influence of his article in the 1950s and 1960s and its accelerating influence since 1970. A new look at a pure theory of local expenditures eric. A critique of tiebout s theory of local public expenditures by truman f. James edwin kee, professor of public policy and public administration the george washington university abstract the last decade has seen a renewed interest in the concept of fiscal decentralization or fiscal federalism. The underprovision of public goods problem we discussed so far is mainly due to the fact that the government can not elicit the citizens voters preferences truthfully. Tiebout argued that local governments might be relatively efficient because citizens could vote with their feet. Building on the work of charles tiebout 1956, presents a consumer choice model in which taxservice ratios at different locations in the metropolitan area and family income are determinants of residential location. An economic theory of fiscal decentralization, in nber, public finances. Tiebout 1956, jpe a pure theory of local expenditures.
The power of parties, cesifo working paper series 4119, cesifo group munich. Working papers journal articles books and chapters software components. Tiebout is frequently associated with the concept of foot voting, that is, physically moving to another jurisdiction where policies are closer to ones ideologies, instead of voting to change a government or its policies. Tiebout 1956 suggests that lots of public goods are provided by local expenditures, and if there were enough communities, individuals would re. Zodrow and peter mieszkowski department of economics, rice university, houston, texas 77251 received june 15,1984. A definition alternative to samuelsons might be simply that a public good is one which should be produced, but for which there is no feasible method of charging the consumers. The hypothesis asserts that economic efficiency will be attained in an economy with local public goods. 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. Tiebout s paper originated as a response to the inability of a market economy to resolve the freerider problem of public goods. The distance between buchanans an economic theory of. This comes after a halfcentury of fiscal centralization in most developed and developing nations. A pure theory of local expenditures 421 ers move to the community whose law happens to fit their preference pattern, they will be at their optimum. As a result, i thought maybe bryan was actually targeting what might be described as the tiebout literature, but he only seems to compare back to assumptions of the original tiebout model.
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. Pdf a pure theory of local expenditures semantic scholar. Note also that the title tiebout s seminal paper a pure theory of local expenditures was a direct parody of samuelsons public good paper a pure theory of public expenditures. Tiebout writes of consumervoters but we use the more. Charles tiebout a pure theory of local expenditures 1956. This item may be available elsewhere in econpapers. Charles tiebout 19241968 observed that market failure arises with public goods because of the difficulties of information transmission that prevent the true valuation of a public good by a consumer being observed. Tiebout s title a pure theory of local expenditures is a direct parody of samuelsons a pure theory of public expenditures for this reason. The body of this paper presents a series of examples, which show that if one tries to generalize the rigorous version of tiebout s theory in a number of interesting directions, then equilibria may no longer exist or may not be pareto optimal. If there are a number of alternative communities or. 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. Download fulltext pdf allocative inefficiency and local government.
In agreement with the underlying theory of representative democracy, representative forms of local government are found to be significantly inefficient relative to the direct democratic form of local. Local public budgets and the tiebout model there exists an extensive literature on the theory of the shifting of property. Charles tiebout s 1956 article a pure theory of local expenditures examined the model of public goods and how citizens voice their preferences for public goods. Tiebout, a pure theory of local expenditures, 1956. Access to the online full text or pdf requires a subscription. Journal of urban economics 19, 356370 1986 pigou, tiebout, property taxation, and the underprovision of local public goods george r.
Pdf an important element in considering school finance policies is that households are not passive. An analysis of the effect of state aid transfers on local. In the tiebout model, people reveal the strength of their taste for some publicly provided goods through their choice of jurisdiction in which to live. The conclusion is that tiebout s idea does not lead to a satisfactory general theory of local public goods. This study has used a tiebout type empirical model to analyze the overall differences in performance between representative and direct democratic forms of local government. The tiebout hypothesis is that individuals reveal their preferences for high or low public services and related highlow taxes by voting with their feet. Unlike previous research, which had assumed that the federal government primarily handled public. Tiebout s a pure theory of local expenditures, which was first published in the journal of political economy in october 1956.
Charles tiebout a pure theory of local expenditures 1956 the tiebout model some from polisci 715 at duke university. Ronald coase, the problem of social cost, journal of law and economics, 1960, 144. The classical approach to fiscal federalism associated with the seminal works of musgrave, 1959, oates, 1972 owes much to tiebout s 1956 pure theory of local expenditures. A pure theory of local expenditures journal of political. Citizens select a local government by moving voting with your feet a response to earlier works by separately samuelson and musgrave. Tiebout, a pure theory of local expenditures, journal of political economy 64, no. This cited by count includes citations to the following articles in scholar. New insights based on an unpublished manuscript december 15, 2015. The theory of local public goods is differentiated from the conventional theory of public goods in one important respect. Modeling variations in responsiveness to municipallevel. The years since the 2008 financial crisis and subsequent economic crash have witnessed significant changes to the funding of the local government system in ireland.
Local government law and economic analysis the study of the relationship between local government law and economics has long had one central text. Lessons and lingering challenges for metropolitan governance in the 21st century. 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. Tiebout, charles, a pure theory of local expenditures, journal of political economy, 1956, 41624. 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. The essence of the model is that there is in fact a nonpolitical solution to the free rider problem in local governance. Individual firms may constitute the basic legal entities in an industry, but their conduct in relation to one another may be conceived as having a particular structure and behavior as an industry. True expression of citizen preferences, thus optimal public goods provision thus optimal taxation x. The ones marked may be different from the article in the profile.
Information, movers, and the tiebout market model, american political. The n communities, in turn, will then send their buyers to market to purchase the goods for the consumervoters in their commu nity. The organization of government in metropolitan areas. Sorry, we are unable to provide the full text but you may find it at the following locations.
A survey of the empirical literature show all authors. This article throws light upon the top three theories for the analysis of public expenditure growth. Pigou, tiebout, property taxation, and the underprovision. A critique of tiebouts theory of local public expenditures.