|
| |
| John P. Conley, Robert Driskill and Ping Wang |
| |
| ''Capitalization, Decentralization, and Intergenerational Spillovers in a Tiebout Economy with a Durable Public Good'' |
|
| |
| |
| We consider an overlapping generations model with a Durable Local Public Good
(DLPG). We establish a Tiebout Theorem (equilibrium exists and is first best) as well as a
Second Welfare Theorem in this dynamic DLPG economy. We de...ne conditions under which
local provision of durable public goods results in the full internalization of the intergenerational spillovers that durability entails. In contrast, when durable public goods are provided
by the national government, internalization does not take place and underprovision of public
goods results. This sets up an institutional tradeoff between national and local provision of
public goods that balances the relative strength of intergenerational and interjurisdictional
spillovers. |
| |
| |
| Keywords: Durable Local Public Goods, Capitalization and Intergenerational Spillover E¤ects,
Dynamic Tiebout Equilibrium, Welfare Analysis. |
JEL: H4 - Publicly Provided Goods: General
D9 - Intertemporal Choice and Growth: General |
| |
| Manuscript Received : Jan 10 2017 | | Manuscript Accepted : Jan 10 2017 |
|
