The Role of Entrepreneurs in the Market for Local Public Goods

Abstract

"This article analyzes a fundamental deficiency in what is arguably the single most important theory of urban politics-the Tiebout model. Since its publication in 1956 and its extension to local political systems by Ostrom, Tiebout and Warren in 1961, Tiebout's concept of a local market for public goods has been a central organizing concept in the study of local politics. Empirical work at the aggregate level has documented many results attributable to Tiebout market mechanisms. Most notably, scholars have established that the polycentric organization of local governments creates market forces leading to more efficient service provision, which is also more responsive to local demand. However, the identification of the actual mechanisms that produce these results is lacking."