Competition, knowledge, and local government

Competition, knowledge, and local government This paper applies the insights of Austrian economics to an important issue in local political economy. Basic economic theory holds that greater competition produces superior outcomes in private goods markets. The same should be true in the “markets” for the output of local government. Brennan and Buchanan (1977, 1980) show that interjurisdictional competition may serve as a potential restraint on the monopoly powers of local Leviathan and Tiebout (1956) shows that it may help lead to the production of efficient quantities of local public goods. However, other potential virtues of competition in the market for local collective goods have been largely ignored. This paper explores those other virtues as well as the neoclassical theoretical foundations of the Tiebout (1956) model, upon which much of this literature is based. This has public policy implications for local governments, which have taken on increased importance given the recent global movement towards more decentralized government. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Austrian Economics Springer Journals

Competition, knowledge, and local government

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Publisher
Springer US
Copyright
Copyright © 2011 by Springer Science+Business Media, LLC
Subject
Economics; Public Finance; Political Science; History of Economic Thought/Methodology
ISSN
0889-3047
eISSN
1573-7128
D.O.I.
10.1007/s11138-011-0168-y
Publisher site
See Article on Publisher Site

Abstract

This paper applies the insights of Austrian economics to an important issue in local political economy. Basic economic theory holds that greater competition produces superior outcomes in private goods markets. The same should be true in the “markets” for the output of local government. Brennan and Buchanan (1977, 1980) show that interjurisdictional competition may serve as a potential restraint on the monopoly powers of local Leviathan and Tiebout (1956) shows that it may help lead to the production of efficient quantities of local public goods. However, other potential virtues of competition in the market for local collective goods have been largely ignored. This paper explores those other virtues as well as the neoclassical theoretical foundations of the Tiebout (1956) model, upon which much of this literature is based. This has public policy implications for local governments, which have taken on increased importance given the recent global movement towards more decentralized government.

Journal

The Review of Austrian EconomicsSpringer Journals

Published: Oct 7, 2011

References

  • Quality competition and public schools: further evidence
    Blair, JP; Staley, SR

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