Knowledge that Transforms

Over two decades ago, Charles Tiebout conjectured that in economies with local public goods, consumers vote with their feet and that this voting creates an approximate market-type equilibrium. He hypothesized that this approximate equilibrium is and, the smaller the moving costs, the closer the equilibrium is to an optimum. This paper provides a formal model of an economy with a local public good and endogenous jurisdiction structures (partitions of the set of agents into jurisdictions) which permits proofs of Tiebout's conjectures. Analogues of classical results pertaining to private-good economies, such as existence of equilibrium and convergence of the core to equilibrium states of the economy, are obtained for the approximate equilibrium and approximate cores. IN HIS SEMINAL PAPER Charles Tiebout [12] argued that the movement of consumers to jurisdictions where their wants are best satisfied, subject to their budget constraints and given (lump sum) taxes within jurisdictions, would lead to near optimal provision of a local public good. In addition, he hypothesized that the larger the economy and the number of jurisdictions and the smaller the moving costs, the nearer the equilibrium would be to an state of the economy. This paper provides proofs of Tiebout's conjectures for local public good economies with endogenous jurisdiction structures (partitions of the set of agents into jurisdictions). An E-core, similar to the Shapley-Shubik weak E-core (in [10]), is defined and it is shown that the E-core is non-empty for all sufficiently large economies. For small E and large economies, points in the E -core have the property that the utilities of consumers are nearly equal to the utilities they would realize at a point in the core of an associated economy with a non-empty core (an economy where agents can be appropriately partitioned into jurisdictions); informally, the E-core shrinks to the core. An E-equilibrium is defined and shown to be in the E -core; therefore, for small E, the E -equilibrium states of the economy are Pareto optimal. In addition, for small E, an s-equilibrium has the properties that: the utilities of consumers are nearly 2 equal to their utilities in a local public equilibrium allocation; and the lump sum taxes paid by most consumers are equal to the Lindahl prices times the quantities consumed of the local public good minus profit shares (the profit shares consumers nearly receive are the per capita profits in local public good

[The purpose of this study is to introduce a measure of inter-income inequality that complements the traditional ones proposed by Gini, Theil, and others. The latter are measures that account for the degree of income inequality within a given population of economic units (called here intra-income inequality ratios) while the former is intended to measure the degree of inequality between income distributions, which is called here economic distance ratio. The generalized mathematical form of this ratio is provided and two particular forms of economic distances ratios are identified. They are presented under both the discrete form, which is distribution-free, for a direct application to observed income distributions, and the parametric form corresponding to a given model of income distribution. Applications are made to the five economic regions of Canada and to white and black family income distributions of the U.S.A.]

[The "new urban economics" is rather explicit with respect to demand for housing but the supply of housing is usually treated in a very cursory fashion. Housing is normally regarded as a one-dimensional good and equilibrium in a city is mostly concerned with the land market rather than the housing market. This paper introduces, on the supply side, the concept of design parameters of a building and, on the demand side, the concept of housing attributes, i.e. multi-dimensional housing. By means of structural analysis an engineering cost function is obtained in terms of design parameters. Due to housing attributes, the demand for housing and the supply of housing, the latter being based on the engineering cost function, should be derived simultaneously. Equilibrium is defined on the housing market rather than on the land market. It is shown how in equilibrium housing rent, land rent design parameters on buildings, and population density all depend on distance from the center of the city and on parameters of the problem: income, city population, diameter of the city, and technical coefficients.]

[This paper addresses the problem of estimating unknown regression coefficients when erroneous data and other violations of the standard assumptions are possible. An estimator which has a limited sensitivity to these departures from the assumptions is presented, and some of its properties are derived. This estimator is shown to have a certain efficiency property relative to other estimators with the same sensitivity to erroneous data.]

AbstractRecursive equilibrium theory is extended and generalized. Optimality of equilibria and supportability of optima are established in a direct way. Four economic applications are reformulated as recursive competitive equilibria and analyzed.

[This paper provides a general proof of the existence of a proportional price with the interest rate strictly greater than the growth rate associated with any efficient proportional program in the polyhedral technology. Proofs for similar theorems are also given for the programs satisfying the regularity condition in other technologies.]