Local public goods as indivisible commodities |
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Institution: | 1. Key Laboratory of Land Surface Pattern and Simulation, Institute of Geographic Sciences and Natural Resources Research, Chinese Academy of Sciences. 11A, Datun Road, Chaoyang District, Beijing 100101, China;2. University of Chinese Academy of Sciences, 19A, Yuquan Road, Shijingshan District, Beijing 100049, China |
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Abstract: | A sharper version of Ellickson's (1979) result on the existence of an approximate Tichout equilibrium is shown to be true under much weaker assumptions. It is also shown that there exists a second-best policy regarding the bundle of public goods each local government offers to a resident. The existence result can also be seen as an extension of a result of Anderson, Khan and Rashid (1982) to economies with production. In this context, the main technical difficulty in that the approximate equilibrium allocation does not lie in the attainable and standard techniques of truncation are not adequate. |
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