The Welfare Costs of Tiebout Sorting with True Public Goods

Florian Kuhlmey () and Beat Hintermann
Additional contact information
Florian Kuhlmey: University of Basel

Working papers from Faculty of Business and Economics - University of Basel

Abstract: We develop a model of Tiebout sorting based on decentralized income taxation, which allows for spillovers and imperfect rivalry in consumption of the publicly provided good. We identify three sources of welfare loss from decentralization: Imperfect redistribution, inter-jurisdictional free-riding, and inecient residential choice. Whereas the welfare loss from imperfect redistribution decreases and that from free-riding rises unambiguously as the publicly provided good becomes more pure, the welfare loss from the inecient residential choice depends non-monotonically on spillovers and rivalry. The equilibrium can be characterized by relative crowding of either the rich or the poor municipality. Our results imply that the characteristics of the publicly provided good are an important determinant for the welfare costs of decentralization.

Keywords: H21, H23, H41, H77; R13, R23, R50; Q58 (search for similar items in EconPapers)
JEL-codes: H21 H23 H41 H77 Q58 R13 R23 R50 (search for similar items in EconPapers)
Date: 2018-12-06
New Economics Papers: this item is included in nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://edoc.unibas.ch/68754/1/20190123151706_5c487762a2e58.pdf (application/pdf)

Related works:
Journal Article: The welfare costs of Tiebout sorting with true public goods (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bsl:wpaper:2019/01

Access Statistics for this paper

More papers in Working papers from Faculty of Business and Economics - University of Basel Contact information at EDIRC.
Bibliographic data for series maintained by WWZ ().