(Non-)Existence of Equilibria in Multicommunity Models

This paper reconsiders equilibrium existence in models with migration and voting over local public goods. We show that under some straightforward assumptions on preferences and income distributions, the basic structure of multicommunity models (i.e., perfect mobility, majority rule, single crossing...

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Bibliographic Details
Published in:	Journal of urban economics Vol. 50; no. 3; pp. 418 - 435
Main Authors:	Hansen, Nico A., Kessler, Anke S.
Format:	Journal Article
Language:	English
Published:	Elsevier Inc 01-11-2001 Elsevier
Series:	Journal of Urban Economics
Subjects:	Economics Equilibrium Fiscal federalism local public goods Migration Population Public goods stratification Urban economics Urban studies migration stratification local public goods fiscal federalism
Online Access:	Get full text
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Summary:	This paper reconsiders equilibrium existence in models with migration and voting over local public goods. We show that under some straightforward assumptions on preferences and income distributions, the basic structure of multicommunity models (i.e., perfect mobility, majority rule, single crossing property) implies that no equilibrium with jurisdictions conducting different policies can exist. Stratification equilibria—with sorting of the population according to income classes—are therefore not as natural as is sometimes suggested. Mechanisms that can serve to support stratification (i.e., tight housing markets, returns to scale in the provision of publicly consumed goods) are discussed.
Bibliography:	ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23
ISSN:	0094-1190 1095-9068
DOI:	10.1006/juec.2001.2226