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Journal of Economic Perspectives: Vol. 11 No. 4 (Fall 1997)

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Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate

Article Citation

Donahue, John D. 1997. "Tiebout? Or Not Tiebout? The Market Metaphor and America's Devolution Debate." Journal of Economic Perspectives, 11(4): 73-81.

DOI: 10.1257/jep.11.4.73

Abstract

The market metaphor of intergovernmental choice as a spur to efficiency (formalized by Charles M. Tiebout) is often invoked to support the shift away from Washington and toward the states. But the model translates badly to governments; governmental entry and exit is costly. Public-sector co11usion often serves citizens' interests. Heterogeneous mobility distorts the signals sent by interstate migration. And while Tiebout (and followers) condition efficiency predictions on optimal distribution, the U.S. devolution movement coincides with rising inequality and has gone furthest where distribution matters most. The metaphor is misapplied. Devolution will likely do more to enfeeble government than to improve it.

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Authors

Donahue, John D. (Harvard U)

JEL Classifications

H73: State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
H11: Structure, Scope, and Performance of Government
H77: Intergovernmental Relations; Federalism; Secession

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