American Economic Journal: Microeconomics: Vol. 6 No. 3 (August 2014)

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Local Institutions and the Dynamics of Community Sorting

Article Citation

Robbett, Andrea. 2014. "Local Institutions and the Dynamics of Community Sorting." American Economic Journal: Microeconomics, 6(3): 136-56.

DOI: 10.1257/mic.6.3.136

Abstract

This paper studies the dynamics by which populations with heterogeneous preferences for public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions best facilitate efficient self-organization when residents can move freely between locations. I find that institutions requiring all residents of a community to pay equal taxes enable subjects to sort into stable, homogeneous communities. Though sorted, residents often fail to attain the provision level best suited for them. When residents can vote for local tax policies with ballots, along with their feet, each community converges to the most efficient outcome for its population.

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Online Appendix (586.40 KB) | Download Data Set (122.22 KB) | Author Disclosure Statement(s) (25.77 KB)

Authors

Robbett, Andrea (Middlebury College)

JEL Classifications

C73: Stochastic and Dynamic Games; Evolutionary Games; Repeated Games
D72: Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
H21: Taxation and Subsidies: Efficiency; Optimal Taxation
H41: Public Goods
H71: State and Local Taxation, Subsidies, and Revenue
H73: State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects

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