The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Tiebout Hypothesis

  • Dennis Epple
Reference work entry


Tiebout (J Polit Econ 64: 416–424, 1956) argued that efficient local public good provision would emerge as households choose among communities offering different local public goods bundles. This article highlights research linking the Tiebout hypothesis to real-world local political jurisdictions, the first such link having been forged by the pioneering contribution of Oates (J Polit Econ 77: 957–971, 1969). Subsequent research has studied voting over tax and expenditure policies within municipalities in a metropolitan area, and sorting of the metropolitan population both within and across those municipalities. This research has provided the foundation for econometric analysis and policy applications.


Clubs Collective choice Demography Equity vs efficiency Exit and voice Fiscal zoning Income stratification Jurisdictional competition Land use planning Local government Local public goods Multi-community equilibrium Neighbourhood effects Peer effects School choice School vouchers Tiebout hypothesis Tiebout, C. 

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In writing this article, I have benefited greatly from Oates (2006) and Fischel (2006). More extensive treatment is provided in Ross and Yinger (1998), Scotchmer (2002) and Epple and Nechyba (2004).


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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Dennis Epple
    • 1
  1. 1.