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Establishing The Micro Foundations of a Macro Theory: Information, Movers, and the Competitive Local Market for Public Goods

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  • Teske, Paul
  • Schneider, Mark
  • Mintrom, Michael
  • Best, Samuel

Abstract

The Tiebout model of competition in the local market for public goods is an important and controversial theory. The current debate revolves around the apparent disparity between macro empirical studies that show greater efficiency in the supply of public goods in polycentric regions compared to consolidated ones and micro evidence of widespread citizen-consumer ignorance, which has been used to argue that individual actions cannot plausibly lead to efficiency-enhancing competition between local governments. We argue that competitive markets can be driven by a subset of informed consumers who shop around between alternate suppliers and produce pressure for competitive outcomes from which all consumers benefit. Using data from a survey of over five hundred households, we analyze the role of these marginal citizen-consumers and incorporate the costs of information gathering and the strategic interests of local governments into the competitive market model.

Suggested Citation

  • Teske, Paul & Schneider, Mark & Mintrom, Michael & Best, Samuel, 1993. "Establishing The Micro Foundations of a Macro Theory: Information, Movers, and the Competitive Local Market for Public Goods," American Political Science Review, Cambridge University Press, vol. 87(3), pages 702-713, September.
    • Handle: RePEc:cup:apsrev:v:87:y:1993:i:03:p:702-713_10
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    1. Hindriks, Jean & Lockwood, Ben, 2009. "Decentralization and electoral accountability: Incentives, separation and voter welfare," European Journal of Political Economy, Elsevier, vol. 25(3), pages 385-397, September.
    2. Deslatte, Aaron & Szmigiel-Rawska, Katarzyna & Tavares, António F. & Ślawska, Justyna & Karsznia, Izabela & Łukomska, Julita, 2022. "Land use institutions and social-ecological systems: A spatial analysis of local landscape changes in Poland," Land Use Policy, Elsevier, vol. 114(C).
    3. Elinor Ostrom, 2012. "Coevolving Relationships between Political Science and Economics," Rationality, Markets and Morals, Frankfurt School Verlag, Frankfurt School of Finance & Management, vol. 3(54), May.
    4. Kjetil Anderson & Fredrik Cerlsen, 1997. "Local Public Services and Migration: Educational Change Evidence from Norwegian Municipalities," The Review of Regional Studies, Southern Regional Science Association, vol. 27(2), pages 123-142, Fall.
    5. Lee Hachadoorian, 2016. "Homogeneity tests of Tiebout sorting: A case study at the interface of city and suburb," Urban Studies, Urban Studies Journal Limited, vol. 53(5), pages 1000-1021, April.
    6. repec:ken:wpaper:0502 is not listed on IDEAS
    7. Jason L. Saving, 2006. "Consumer Sovereignty in the Modern Global Era," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 22(Fall 2006), pages 107-119.
    8. Peter Boettke & Christopher Coyne & Peter Leeson, 2011. "Quasimarket failure," Public Choice, Springer, vol. 149(1), pages 209-224, October.
    9. Matthew Lee Howell, 2014. "The Logic of Urban Fragmentation: Organisational Ecology and the Proliferation of American Cities," Urban Studies, Urban Studies Journal Limited, vol. 51(5), pages 899-916, April.
    10. Keith Dowding & Peter John, 2008. "The Three Exit, Three Voice and Loyalty Framework: A Test with Survey Data on Local Services," Political Studies, Political Studies Association, vol. 56(2), pages 288-311, June.
    11. Elinor Ostrom, 2014. "A Polycentric Approach For Coping With Climate Change," Annals of Economics and Finance, Society for AEF, vol. 15(1), pages 97-134, May.
    12. Paul G. Lewis & Mark Baldassare, 2010. "The Complexity of Public Attitudes Toward Compact Development," Journal of the American Planning Association, Taylor & Francis Journals, vol. 76(2), pages 219-237, April.
    13. Benedict S. Jimenez, 2015. "The Fiscal Performance of Overlapping Local Governments," Public Finance Review, , vol. 43(5), pages 606-635, September.
    14. Deborah Wilson, 2008. "Exit, Voice and Quality in the English Education Sector," The Centre for Market and Public Organisation 08/194, The Centre for Market and Public Organisation, University of Bristol, UK.

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