Question

1) describe what is meant by Tiebout choice. Do you think Tiebout choice provides for enough choice for parents over where their child attends school? Why or why not? What are the advantages of Tiebout choice? What are the disadvantages of Tiebout choice? What assumptions does the Tiebout choice model rely on in order for it to be efficient?

Answer 1

Tiebout choice model advocates  that citizen consumer’s preference/choice of public goods can be captured through a competitive metropolitan market of local governments.

Local governments produce a package of public goods. Depending on the particular package offered, there is some optimal community size that can provide that package of goods at lowest cost. If citizens are perfectly mobile (they can move on a whim), some people in oversized cities will leave for undersized cities, recognizing that they can get their desired package of public goods at lower cost elsewhere.

According to me some tiebout choice is available in U.S under federal structure. The quality of a community’s schools is central to any family’s aspirations. Public education has largely been a local matter for school boards and states that allocate most of their funding. Yet for the past several decades, the federal government has entered the field. A parent may relocate in the pursuit of good public education for a child. Some states in U.S top the chart and others rank much below.

Massachusetts ranked as the No. 1 state for public schools, taking the lead in both quality and safety. New Jersey, Connecticut, New Hampshire, Vermont and Virginia followed behind. Some of the worst ranked states for public schools included New Mexico, Louisiana, Alaska and Arizona, along with District of Columbia.

So Parents do have tiebout choice to some extent.

Advantages Of Tiebout choice: These can be summed in the form of implications of theory/model.

1.Municipal integration is justifiable only or more of any service is forthcoming at the same total cost and without any reduction of any other services.

2.Policies that promote residential mobility and increase the knowledge of consumer-voter will improve the allocation government expenditures in the same sense that mobility among the jobs and knowledge relevant to the location of industry and labour improve the allocation of private resource.

3.Decentralisation would serve as a better model for the governance of metropolitan areas rather than centralisation model.

Disadvantages of Tiebout choice:

1.Tiebout explicitly falsely assumes that local governments are perfect competitors.

2.Tiebout implicitly assumes that dissatisfied residents can take their real estate with them. Virtually the opposite is true.  

3.Tiebout implicitly assumes that non-profit competition works the same way as for-profit competition.

4.With non-profit incentives, neither the number of local governments nor the ease of exit lead to anything resembling perfectly competitive results.

The following are the major assumptions made by Tiebout:

* Consumer-voters are fully mobile and will move to that community where their preference patterns, which are set, are best satisfied

* Consumer-voters assumed to have full knowledge of differences among revenue and expenditures patterns and to react to these differences

* There are large number of communities in which the consumer-voters may choose to live

* The population is considered to be living on dividend income (thereby avoiding employment restrictions)

* The public goods/services supplied do not exhibit any external economies or diseconomies