Operations, Information and Decisions Papers

Document Type

Journal Article

Date of this Version

2005

Publication Source

The Journal of Economic Education

Volume

36

Issue

4

Start Page

332

Last Page

341

DOI

10.3200/JECE.36.4.332-344

Abstract

This classroom exercise illustrates the Tiebout (1956) hypothesis that residential sorting across multiple jurisdictions leads to a more efficient allocation of local public goods. The exercise places students with heterogeneous preferences over a public good into a single classroom community. A simple voting mechanism determines the level of public good provision in the community. Next, the classroom is divided in two, and students may choose to move between the two smaller communities, sorting themselves according to their preferences for public goods. The exercise places cost on movement at first, then allows for costless sorting. Students have the opportunity to observe how social welfare rises through successive rounds of the exercise, as sorting becomes more complete. They may also observe how immobile individuals can become worse off because of incomplete sorting when the Tiebout assumptions do not hold perfectly.

Copyright/Permission Statement

This is an Accepted Manuscript of an article published by Taylor & Francis in The Journal of Economic Education on 07 Aug 2010, available online: http://wwww.tandfonline.com/10.3200/JECE.36.4.332-344

Keywords

classroom experiments, public goods, residential sorting, tiebout hypothesis

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Date Posted: 27 November 2017

This document has been peer reviewed.