A study of endogenous political institutions: The case of local jurisdiction boundaries

D. Andrew Austin, University of Pennsylvania


Decisions to alter the boundaries of a polity have both economic and political consequences. This dissertation analyzes how economic and political forces affect changes in jurisdiction boundaries. The first chapter reviews relevant literature and summarizes key results. The second chapter analyzes secession without exclusion through a non-cooperative game theoretic model using a modified Perfectly Coalition-proof equilibrium (PCPNE) concept. A finite set of voters choose a tax rate, which implicitly sets a level of public goods provision. Voters differ by wealth, and either rich or poor voters may wish to secede. If secession occurs in equilibrium, the original polity separates into two new polities, one rich and one poor. The major result of this chapter is that secession cannot be prevented by the choice of a tax rate differing from the one-shot tax vote outcome. The third chapter provides numerical examples of the secession game. Extensions of single crossing rule properties are developed where fiscal externalities are present. Examples show equilibria exist, and that the modified PCPNE concept is distinct from the unmodified PCPNE concept. The fourth chapter provides an empirical analysis of annexation in large American cities between 1950 and 1960 using 1960 Census data. A model is developed to separate the effects of political variables, representing tastes for the public good from effects of economic variables, representing the acquisition of tax base by a city. The estimating equation, based on maximizing behavior of suburban and city officials, is estimated using a maximum likelihood procedure. The regression estimates the probability a given tract is annexed as a function of population characteristics, and city and suburban financial data characteristics. The estimates show political motives dominate economic motives in explaining annexation.

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Recommended Citation

Austin, D. Andrew, "A study of endogenous political institutions: The case of local jurisdiction boundaries" (1991). Dissertations available from ProQuest. AAI9211900.