Tiebout's tale in spatial economies: Entrepreneurship, self-selection, and efficiency

This paper establishes the existence and efficiency of equilibrium in a local public goods economy with spatial structures by formalizing Hamilton's [Hamilton, B.W., 1975. Zoning and property taxation in a system of local governments Urban Studies 12, 205–211] elaboration of Tiebout's [Tiebout, C., 1956. A pure theory of local public expenditures. Journal of Political Economy 64, 416–424] tale. We use a well-known equilibrium concept from Rothschild and Stiglitz [Rothschild, M., Stiglitz, J.E., 1976. Equilibrium in competitive insurance markets: an essay on the economics of imperfect information. Quarterly Journal of Economics 40, 629–649] in a market with asymmetric information, and show that Hamilton's zoning policy plays an essential role in proving the existence and efficiency of equilibrium. We use an idealized large economy following Ellickson, Grodal, Scotchmer and Zame [Ellickson, B., Grodal, B., Scotchmer, S., Zame, W.R., 1999. Clubs and the market, Econometrica 67, 1185–1217] and Allouch, Conley and Wooders [Allouch, N., Conley, J.P., Wooders, M.H., The Tiebout Hypothesis: On the Existence of Pareto Efficient Competitive Equilibria, (2004), mimeograph]. Our theorem is directly applicable to the existence and efficiency of a discrete spatial approximation of mono- or multi-centric city equilibria in an urban economy with commuting time costs, even if we allow the existence of multiple qualities of (collective) residences, when externalities due to traffic congestion are not present.     

Anonymous price taking equilibrium in Tiebout economies with a continuum of agents: Existence and characterization

We introduce a model of a local public goods economy with a continuum of agents and jurisdictions with finite but unbounded populations, where the set of possible projects for each jurisdiction/club is unrestricted in size. Under boundedness of per capita payoffs, which simply ensures that equal treatment payoffs are bounded above, we apply results of Kaneko and Wooders (1986) to obtain nonemptiness of the core of the economy. We then demonstrate, under the stronger condition of strict small group effectiveness, that the equal treatment core coincides with the set of price-taking equilibrium outcomes with anonymous prices—that is, prices for public goods depend only on observable characteristics of agents. Existence of equilibrium follows from nonemptiness of the core and equivalence of the core to the set of equilibrium outcomes. Our approach provides a new technique for showing existence of equilibrium in economies with a continuum of agents.     

Equilibrium theory under ambiguity

We extend the classical results on the Walras–core existence and equivalence to an ambiguous asymmetric information economy; that is, an economy where agents maximize Maximin Expected Utility (MEU). The interest of considering ambiguity arises from the fact that, in the presence of MEU decision making, there is no conflict between efficiency and incentive compatibility (contrary to the Bayesian decision making). Our new modeling of an ambiguous asymmetric information economy necessitates new equilibrium notions, which are always efficient and incentive compatible.     

Fiscal decentralization under free mobility

In this paper it is shown that, under the proper convexity assumption, any efficient allocation of an economy subdivided into locationally separated regions can be sustained by means of fiscal decentralization with profit maximizing local governments. For that to be true, however, a system of intergovernmental grants is needed. Without such grants, fiscal decentralization and Tiebout equilibria are closely related concepts. Since a Tiebout equilibrium generally fails to exist [Bewley (1981)], these grants play an important role not only for redistribution but, in the first place, to make fiscal decentralization a feasible allocation mechanism.     

Tiebout choice and residential segregation by race in US metropolitan areas, 1980–2000

This article examines the link between local government fragmentation, or “Tiebout choice,” and segregation between black and white residents. As suggested by Tiebout [Tiebout, C., 1956. A pure theory of local public expenditures. Journal of Political Economy 64, 416–424.], fragmented local governance structures may encourage households to vote with their feet and sort into communities based on their willingness to pay for local public services. This outcome has been well documented. The nuance explored here is that, if the demand for local public services varies by race or if households have preferences for neighbors with specific racial characteristics, local government fragmentation may foster an increase in residential segregation by race across neighborhoods and jurisdictions. Results from metropolitan-level regressions suggest that increased Tiebout choice is associated with increases in black–white residential segregation within US metropolitan areas. Comparable results are obtained from household-level estimates, where the black racial composition of a household's census tract of residence is regressed on household-level controls and racially stratified measures of Tiebout choice. Results from both approaches suggest that a 10% increase in Tiebout choice would increase neighborhood segregation by no more than 1%, while segregation across jurisdictions would increase by between 4% and 7%.     

The effect of property taxes on vacation home growth rates: Evidence from Michigan

The Tiebout model assumes that individuals sort to the jurisdiction which best matches their fiscal preferences. However, there is a paucity of reliable estimates for the impact of tax changes on household mobility. We utilize a state mandated school finance reform and temporal differences in vacation home densities to provide a unique test of this fundamental Tiebout assumption. The results show that changes in property taxes explain a significant amount of the variation in vacation home growth; a 3–4 mil decrease in property tax rates is associated with an increase of approximately one vacation home per square kilometer.     

Local public goods and average cost pricing

Existence of a compensated Tiebout equilibrium is proved for an economy with a measure space of consumers. This result is then extended to show the existence of equilibrium for an economy with natural monopolies and contestable markets.     

Jurisdictional homogeneity and the Tiebout hypothesis

In this paper, an alternative to the capitalization approach to testing the Tiebout model is presented. The Tiebout foot voting mechanism suggests that households will sort and stratify into (approximately) homogeneous local public goods jurisdictions. At a point in time, the efficiency of the sort will be positively related to the number of existing jurisdictions. Using a measure of homogeneity introduced by Theil, the relationship between stratification (homogeneity within jurisdiction) and number of jurisdictions is tested. For a sample of school districts within 33 SMSAs, the Tiebout stratification hypothesis is confirmed.     

Growth effects of annuities and government transfers in perpetual youth models

We show that in overlapping generations endogenous growth models with uncertain lifetime, the introduction of government transfers always increases economic growth by crowding out the private annuity market and increasing accidental bequests. In particular, if the government imposes a flat-rate consumption tax (which is neutral to the consumption–saving margin), uses part of the tax revenue for unproductive purposes, and rebates the rest equally across agents as a lump-sum transfer, the economy grows faster and improves the welfare of future generations.     

New conditions for the existence of Radner equilibrium with infinitely many states

In atomless differential information economies, equilibria are known not to exist prevalently even when agents are risk averse expected utility maximizers. The notion of prevalence involves essentially picking an economy at random. In this paper, however, we establish existence results with economically meaningful assumptions on the information structure. We obtain existence when agents have independent information, and also when the total endowment of the economy is common knowledge.     

Heterogeneous expectations and debt in a growth model for a small open economy

We extend an aggregative growth model for a small open economy by developing a framework in which boundedly rational agents raise credit in proportion to their expected income. Moreover, these agents are heterogeneous in the sense that they switch between an extrapolative and a regressive forecasting rule with respect to perceived market circumstances. Using a mixture of analytical and numerical tools, we attempt to describe the characteristics of our model’s dynamical system. Our results then suggest that self-fulfilling short-run expectations do not only have important consequences for fluctuations in economic activity but are also a source of simple endogenous dynamics.     

Learning about fiscal policy and the effects of policy uncertainty

In this paper we ask how uncertainty about fiscal policy affects the impact of fiscal policy changes on the economy when the government tries to counteract a deep recession. The agents in our model are uncertain about the conduct of fiscal policy and act as econometricians by estimating fiscal policy rules that might change over time.We find that assuming that agents are not instantaneously aware of the new fiscal policy regime in place leads to substantially more volatility in the short run and persistent differences in average outcomes. We highlight issues that can arise when a policymaker wants to announce a policy change. From a methodological perspective, we introduce a novel way to model learning in the face of discrete policy changes.     

CAPITALIZATION AND THE THEORY OF LOCAL PUBLIC FINANCE: AN INTERPRETIVE ESSAY

Abstract. The Tiebout hypothesis that consumer mobility and interjurisdictional competition leads to efficient provision of local services has provoked much controversy and debate in recent years. This article summarizes the opposing and conflicting viewpoints on this subject and presents a synthesis of the theoretical and empirical literature. The basic conclusion of this literature is that only under very restrictive assumptions will foot-voting and interjurisdictional competition ensure allocative efficiency in the local public sector. Nevertheless, the Tiebout mechanism offers important insights for public policy debates on the assignment of taxes and services and the design of equalization grants. Oates' suggestion that capitalization of fiscal differentials into residential property values provides an empirical test of the Tiebout hypothesis also generated an intense debate on the theoretical validity of this procedure and a heightened interest in its empirical applications. This debate is evaluated and an overview is given of the leading empirical approaches to test the efficiency and equity implications of the Tiebout mechanism. Controversial empirical issues such as the choice of the tax price term, the level of aggregation and econometric estimation problems are highlighted in this part of the survey.     

物联网经济下的会计信息使用 ——以海尔共赢增值表为例

会计信息是一项重要的公司治理机制。然而,在新经济与新技术的驱动下,传统业态的模式变革对单纯财会信息的治理功能提出了挑战,管理会计信息日益受到社会各界的关注。从物联网经济的特征分析入手,系统阐述物联网技术驱动下企业商业模式变革对会计信息使用的深刻影响,突出了以海尔共赢增值表为代表的管理会计信息载体在物联网经济下企业内部治理实践中的重要作用,并以此为探索或践行物联网业务模式的众多企业提供一定的借鉴与参考。     

会计信息披露模式重构

知识经济条件下会计信息呈现出不同特征,这些特征使传统会计信息披露模式不再适应时代的发展。本文主要探讨了在知识经济条件下我国会计信息披露模式的重新构建,以期为研究会计信息披露提供参考。     

Coalition structure values in differential information economies: is unity a strength?

The coalition structure (CS) value, introduced by Owen [G. Owen, Values of games with a priori unions, in: Essays in Mathematical Economics and Game Theory, Springer Verlag, Berlin, 1977] and Hart and Kurz [Econometrica 51 (1983) 1047], generalizes the Shapley value to social situations where coalitions form for the purpose of bargaining. This paper introduces the CS value to economies with differential information. We show that the private CS values exists and is Bayesian incentive compatible. Moreover, we construct examples that go against the intuitive viewpoint that “unity is strength”. In particular, we consider a three-person economy in which two agents bargain as a unit against the third agent. We show that bargaining as a unit is advantageous if and only if information is complete. This result sheds new light on bargaining under differential information.     

Inflation and output volatility under asymmetric incomplete information

The assumption of asymmetric and incomplete information in a standard New Keynesian model creates strong incentives for monetary policy transparency. We assume that the central bank has better information about its objectives than the private sector, and that the private sector has better information about shocks than the central bank. Transparency has the potential to trigger a virtuous circle in which all agents find it easier to make inferences and the economy is better stabilised. Our analysis improves upon existing work by endogenising the volatility of both output and inflation. Improved transparency most likely manifests itself in falling output volatility.     

网络经济正反馈系统动力学模型分析

随着计算机网络技术飞速发展,网络化和全球化已成为不可抗拒的世界潮流。网络经济正渐渐取代传统的工业经济,人类社会正在迈向网络经济时代。网络经济作为一种新经济形态,存在着与传统经济不同的新特点。本文从系统动力学观点出发,在分析网络经济基础上,提出了网络经济正反馈系统动力学模型,探讨了正反馈效应带来的网络经济新特点。     

Gross rents and market values: Testing the implications of Tiebout's hypothesis

In this paper, we propose a new empirical test of the implications of the Tiebout hypothesis. The test we advance uses gross rent rather than market value as the dependent variable in the estimating equation; we argue that this improves upon the previous studies in several respects. We then explore the determinants of gross rent using a large sample of single-family dwellings in San Mateo County, California.     

Core and equilibria in coalitional asymmetric information economies

We study coalitional economies under uncertainty and asymmetric information, assuming a finitely additive measure space of agents and finitely many possible states of nature. We introduce a suitable core notion showing that it is equivalent to Walrasian expectations equilibria. The finitely additive approach proposed in the paper permits also asymmetric information economy with countably many agents, rather than requiring only a continuum. Moreover, it allows us to overcome well-known criticisms related to the interpretation of individual private core notions.