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The Welfare Costs of Tiebout Sorting with True Public Goods
Project funded by own resources
Project title The Welfare Costs of Tiebout Sorting with True Public Goods
Principal Investigator(s) Hintermann, Beat
Project Members Kuhlmey, Florian
Organisation / Research unit Departement Wirtschaftswissenschaften / Public Economics / Public Finance (Hintermann)
Project start 01.03.2012
Probable end 31.12.2019
Status Completed

We develop a model of Tiebout sorting based on decentralized income taxation, which allows for spillovers and imperfect rivalry in consumption of the publicly provided good. We identify three sources of welfare loss from decentralization: Imperfect redistribution, inter-jurisdictional free-riding, and inefficient residential choice. Whereas the welfare loss from imperfect redistribution decreases and that from free-riding rises unambiguously as the publicly provided good becomes more pure, the welfare loss from the inefficient residential choice depends non-monotonically on spillovers and rivalry. The equilibrium can be characterized by relative crowding of either the rich or the poor municipality. Our results imply that the characteristics of the publicly provided good are an important determinant for the welfare costs of decentralization.

Keywords Environmental federalism, tax competition, spillovers, public goods, decentralization
Financed by University funds

Published results ()

  ID Autor(en) Titel ISSN / ISBN Erschienen in Art der Publikation
4506920  Kuhlmey, Florian; Hintermann, Beat  The welfare costs of Tiebout sorting with true public goods  0927-5940 ; 1573-6970  International tax and public finance  Publication: JournalArticle (Originalarbeit in einer wissenschaftlichen Zeitschrift) 

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