Local Institutions and the Dynamics of Community Sorting

Andrea Robbett

American Economic Journal: Microeconomics, 2014, vol. 6, issue 3, 136-56

Abstract: This paper studies the dynamics by which populations with heterogeneous preferences for public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions best facilitate efficient self-organization when residents can move freely between locations. I find that institutions requiring all residents of a community to pay equal taxes enable subjects to sort into stable, homogeneous communities. Though sorted, residents often fail to attain the provision level best suited for them. When residents can vote for local tax policies with ballots, along with their feet, each community converges to the most efficient outcome for its population.

JEL-codes: C73 D72 H21 H41 H71 H73 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mic.6.3.136
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Citations: View citations in EconPapers (13)

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