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A mechanism design approach to the Tiebout Hypothesis

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  • Laurent Lamy

    (CIRED - centre international de recherche sur l'environnement et le développement - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - EHESS - École des hautes études en sciences sociales - AgroParisTech - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Philippe Jehiel

    (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

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.

Suggested Citation

  • Laurent Lamy & Philippe Jehiel, 2018. "A mechanism design approach to the Tiebout Hypothesis," PSE-Ecole d'économie de Paris (Postprint) hal-01688318, HAL.
    • Handle: RePEc:hal:pseptp:hal-01688318
    DOI: 10.1086/696273
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    Cited by:

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    4. Baranov, Oleg, 2018. "An efficient ascending auction for private valuations," Journal of Economic Theory, Elsevier, vol. 177(C), pages 495-517.
    5. Mariann Ollár & Antonio Penta, 2023. "A Network Solution to Robust Implementation: The Case of Identical but Unknown Distributions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(5), pages 2517-2554.
    6. Mariann Ollar & Antonio Penta, 2021. "A network solution to robust implementation: The case of identical but unknown distributions," Economics Working Papers 1776, Department of Economics and Business, Universitat Pompeu Fabra.
    7. Revelli, Federico, 2019. "The electoral migration cycle," European Journal of Political Economy, Elsevier, vol. 59(C), pages 461-482.
    8. Jehiel, Philippe & Lamy, Laurent, 2014. "On discrimination in procurement auctions," CEPR Discussion Papers 9790, C.E.P.R. Discussion Papers.
    9. Mariann Ollár & Antonio Penta, 2019. "Implementation via transfers with identical but unknown distributions," Economics Working Papers 1676, Department of Economics and Business, Universitat Pompeu Fabra.
    10. Felix Bierbrauer, 2016. "Effizienz oder Gerechtigkeit? Ungleiche Einkommen, ungleiche Vermögen und die Theorie der optimalen Besteuerung," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_03, Max Planck Institute for Research on Collective Goods.

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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H4 - Public Economics - - Publicly Provided Goods

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