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Capitalization, Decentralization, and Intergenerational Spillovers in a Tiebout Economy with a Durable Public Good

John Conley (), Robert Driskill and Ping Wang ()

No 17-00003, Vanderbilt University Department of Economics Working Papers from Vanderbilt University Department of Economics

Abstract: We consider an overlapping generations model with a Durable Local Public Good (DLPG). We establish a Tiebout Theorem (equilibrium exists and is first best) as well as a Second Welfare Theorem in this dynamic DLPG economy. We de...ne conditions under which local provision of durable public goods results in the full internalization of the intergenerational spillovers that durability entails. In contrast, when durable public goods are provided by the national government, internalization does not take place and underprovision of public goods results. This sets up an institutional tradeoff between national and local provision of public goods that balances the relative strength of intergenerational and interjurisdictional spillovers.

Keywords: Durable Local Public Goods; Capitalization and Intergenerational Spillover E¤ects; Dynamic Tiebout Equilibrium; Welfare Analysis. (search for similar items in EconPapers)
JEL-codes: H4 D9 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-pbe
Date: 2017-01-10
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Related works:
Journal Article: Capitalization, decentralization, and intergenerational spillovers in a Tiebout economy with a durable public good (2019) Downloads
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