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This material has been published in Ricerche Economiche 50 367-387 (1996), the only definitive repository of the content that has been certified and accepted after peer review. Copyright and all rights therein are retained by Academic Press. This material may not be copied or reposted without explicit permission. (Copyright(C) 1979 by Academic Press, Inc.).
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Taste-homogeneity of optimal jurisdictions in a Tiebout economy with crowding types and endogenous educational investment choices
JOHN P. CONLEY, MYRNA WOODERS

We examine a local public goods economy with differentiated crowding. The main innovation is that we assume that the crowding effects of agents are a result of choices that agents make. For example, agents may be crowded (positively or negatively) by the skills that other members of their jurisdiction possess and these skills may be acquired through utility maximizing educational investment choices made in response to equilibrium wages and educational costs. In such an environment, we show that taste-homogeneous jurisdictions are optimal. This contrasts with results for both the standard differentiated crowding model and the crowding types model. We also show that the core and equilibrium are equivalent, and that decentralization is possible through anonymous prices having a structure similar to cost-share equilibrium prices.

 Keywords: Local public goods, crowding types, peer group effects, cost-share equilibrium,

Ricerche Economiche, v 50, n 4, December, 1996, p367-387 (ID rx960024)
Copyright (C) 1996 Academic Press Limited

Full article (PDF 194K)
"Taste-homogeneity of Optimal Jurisdictions in a Tiebout Economy with Crowding Types and Endogenous Educational Investment Choices," (with J. Conley) Ricerche Economiche 50 (1996) 367-387.