Tiebout Model of Public Goods

No video

Tiebout Model of Public Goods

Рет қаралды 4,834

Күн бұрын

#YOUCANLEARNECONOMICS
#ECONOMICS
The key features of Tiebout’s model are the assumptions that people do differ in their tastes for publicly provided goods and that they are mobile. The advantages of having low-level jurisdictions (local governments) provide the public goods is that there are many more towns and cities
than there are provinces or countries and that it is much less costly to move among towns and cities than it is to move among provinces or countries. At the time he wrote this article, Tiebout lived and worked in the Chicago area. Like many other large American cities, the Chicago area
contains a large number of jurisdictions. In addition to the city of Chicago, there are more than 50 different suburbs, each with their own local government. That is a much larger number of different jurisdictions than exists in the GTA.
Recall the free rider problem, it is inefficient to exclude people from consuming a pure public good, and if people are not excluded, then it is difficult to learn people’s demand curves for the public good. This is information which is necessary in order to calculate which allocation is consistent with the Samuelson condition for efficiency. What are being provided in Tiebout’s model are not pure public goods, as defined early in the term (as being both non-rival and non-excludable). The “publicly provided goods” which Tiebout analyzed are somewhat different. He referred to them as local public goods. A “local public good” is different from a pure public good (or a pure private good).
Tiebout’s local public goods are non-excludable, but only for residents of the jurisdiction. That is, if some town is providing some local public good, all the residents of that town get to consume the full benefits : they cannot be excluded. But residents of other towns are completely excluded from any benefits of the first town’s local public sector. So local public goods
are (completely) non-excludable within the jurisdiction, and (completely) excludable outside the jurisdiction.
A pure public good was also defined as being non-rivalrous. The total cost of providing a given quality of a pure public good does not increase with the number of people consuming it. Tiebout assumed that the total cost of a local public good is proportional to the number of people consuming it. Double the population served (holding constant the underlying quality of the public output being provided) and the total cost of the local public good doubles. Expressed otherwise, the cost per person of a local public good is constant, as a function of the number of
people consuming the local public good. Tiebout’s model also rests on several other assumptions, some reasonably realistic, others less
so. He assumed that people’s incomes were given, and did not vary with the jurisdiction in which they chose to live. This is consistent with a large metropolitan area, in which people commute to work. In this case, people could move from one suburb to another, without having to change
their job. He assumed that there were no costs to moving. Of course that is not literally true, but the costs of moving within a metropolitan area are relatively small. He assumed that people were well-informed about the local public sector in each jurisdiction, and so could make a location
choice based on the local public goods provided in different jurisdictions (and on the costs of those local public goods).
Under the assumptions he made, the outcome under public
provision will be efficient
Subscribe me @ / ezclassesfaghsa
Like me on Facebook @ / faghsa
Follow me on Twitter @ ?l...
Mail ID: faghsa1760@gmail.com

Пікірлер: 20

@naveenrawat6817 Жыл бұрын

Always excellent teaching 🙏🙏🙏👍👍👍

@EZClassesfaghsa Жыл бұрын

Keep watching

@Its_Your_Boy.. Жыл бұрын

Dear sir you don't know how much we love you 🙂

@EZClassesfaghsa Жыл бұрын

Thanks 🙏

@harigovindchouhan7928 Жыл бұрын

Dear sir Aap hum Jaise Student ke liye itna Kuchh kar rahe hai aapka बहुत-बहुत aabhar aur बहुत-बहुत dhanyvad Sirji Aap Swasth Rahen mast Rahe aur Hamesha khush rahe aise hi padhaate Rahe Thank you so much sir ji

@EZClassesfaghsa Жыл бұрын

Ji bohot Shukriya 🙏