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MENTAL MODEL · M3472

Tiebout Model

Tiebout Model
BusinessHigh supportPublic Economics
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Updated 2026-07-31

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INTRODUCTION

English translation pending.

CORE DEFINITION

A theory of local public goods proposed by Charles Tiebout. If residents are free to move and many jurisdictions offer different combinations of local services and taxes, households will sort into the community that best matches their preferences. Mobility substitutes for a market: it reveals preferences that voting cannot, and competition among jurisdictions pushes toward efficient local provision. The result depends on strong assumptions, including costless mobility, full information and a large number of jurisdictions, which is why the model is a benchmark rather than a description.

SCAFFOLDING EFFECT

psychology

Reduce cognitive load

- Sorting Lens: read migration as a revealed preference for a tax and service bundle. - Competition Check: ask whether jurisdictions face real pressure to improve local services. - Equity Caution: note who can move and who is trapped in the worst jurisdiction.

anchor

Anchor fast decisions

Where residents can move, dissatisfaction with local services or taxes becomes an exit option rather than a protest. Households with similar preferences cluster, which reduces the heterogeneity a single jurisdiction must satisfy and makes matching easier. Jurisdictions that tax heavily without delivering services lose residents and tax base, which creates pressure toward efficiency. Because the mechanism relies on exit, it works best for mobile and informed households and fails for those who cannot move.

MINIMUM ACTION

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Source support: Explicit

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    en.wikipedia.orghttps://en.wikipedia.org/wiki/Tiebout_modelZH · Explicit
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