A mechanism design approach to the Tiebout Hypothesis
Résumé
We revisit the Tiebout hypothesis in a world in which agents may learn extra information
as to how they value the various local public goods once located, and jurisdictions
are free to commit to whatever mechanism to attract citizens. It is shown in
quasi-linear environments that eciency can be achieved as a competitive equilibrium
when jurisdictions seek to maximize local revenues but not necessarily when they seek
to maximize local welfare. Interpretations and limitations of the result are discussed.