Public Economic (Econometric), it’s a homework.?
Only typed, no hand writing, thx.
Urban Studies, Vol. 31, Nos. 4/5, 1994 767-797
Tiebout : A Survey of the Empirical Literature
Keith Dowding, Peter John and Stephen Biggs
The consumer-voter may be viewed as
picking that community which best
satisfies his preference pattern for public
goods . At the central level the preferences
of the consumer-voter are given, and the
government tries to adjust to the pattern of
those preferences, whereas at the local
level various governments have their revenue and expenditure more or less fixed .
Given these revenue and expenditure patterns, the consumer-voter moves to that
community whose local government best
satisfies his set of preferences . (Tiebout,
1956, p. 418)
This is one of the most-quoted paragraphs
from one of the most-cited articles in urban
politics .' The view that `voting with one's
feet' will reveal citizens' preferences for local public services and lead to the efficient
allocation of local public goods is often referred to as the 'Tiebout hypothesis' . Rather,
Tiebout's argument is a `pure theory' which
in economics signals a model shorn of all
'real-life' complicating factors in order to
highlight a particular causal or potentially
causal element .' Citizen-voters weigh up the
value of local services and the burden of
local taxes and cross jurisdictional
boundaries to get the best package of local
taxes and services . This may act as an
alternative form of local accountability to the
electoral process . A family of Tiebout models has developed as new work relaxed or
added to Tiebout's original formulation . Different tests concentrate upon different, at
times contrary, implications which may be
drawn from the original model .
There are seven highly abstract assumptions in Tiebout's model :
1 . Consumer-voters are fully mobile and
move to that community which best
satisfies their preference pattern for public
2. Consumer-voters have full knowledge of
the revenue and expenditure patterns of
all local governments .
3. There is a large number of communities
from which to choose .
4. Consumer-voters live on dividend income .
5 . Public services exhibit no external economies or diseconomies of scale .
6. Services are set according to the preferences of current inhabitants . There is an
optimum size of community given the
fixed resource of land and the demand
conditions of current residents .
7 . Communities below average size seek to
grow, those at or above it try to keep their
populations constant . 3
Tiebout provides a solution to Samuelson's
(1954, 1955, 1958) argument that the market
Keith Dowding is in the Department of Government, London School of Economics and Political Science, Houghton Street, London
WC2A 2AE, UK; Peter John is in the Department of Politics, Keele University, Keele, Staffordshire, ST5 5BG, UK; and Stephen Biggs
is in the Department of Government, Brunei University, Uxbridge, Middlesex UB83PH, UK . The research for this article was supported
by the UK Economic and Social Research Council, Grant no . R000 23 3815.
Downloaded from usj.sagepub.com at University of Minnesota Libraries on November 13, 2015
KEITH DOWDING ET AL.
cannot correctly identify demand for collective goods . Samuelson suggests that the absence of a market mechanism for public
goods results in inefficient allocation in comparison to the market for private goods .
However, Tiebout (1956 ; p. 422) argues that
a mechanism may exist to allow local collective goods to be allocated more efficiently :
There is no way in which the consumer
can avoid revealing his preferences in a
spatial economy. Spatial mobility provides
the local-goods counterpart to the private
market's shopping trip .
Mobility is the fundamental
(Tiebout, 1956, p. 420) :