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American Economic Review: Vol. 98 No. 3 (June 2008)

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Do People Vote with Their Feet? An Empirical Test of Tiebout

Article Citation

Banzhaf, H. Spencer, and Randall P. Walsh. 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout." American Economic Review, 98(3): 843-63.

DOI: 10.1257/aer.98.3.843

Abstract

Charles Tiebout's suggestion that people "vote with their feet" for communities with optimal bundles of taxes and public goods has played a central role in local public finance for over 50 years. Using a locational equilibrium model, we derive formal tests of his premise. The model predicts increased population density in neighborhoods experiencing exogenous improvements in public goods and, for large improvements, increased relative mean incomes. We test these hypotheses in the context of changing air quality. Our results provide strong empirical support for the notion that households "vote with their feet" for environmental quality.

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Authors

Banzhaf, H. Spencer (GA State U)
Walsh, Randall P. (U CO)

JEL Classifications

D72: Models of Political Processes: Rent-seeking, Elections, Legislatures, and Voting Behavior
H41: Public Goods
H73: State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
Q53: Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling


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