Econometrica: Apr 1980, Volume 48, Issue 3

Measuring Externalities and Second Best Distortions in the Theory of Local Public Goods

https://doi.org/0012-9682(198004)48:3<627:MEASBD>2.0.CO;2-Z
p. 627-642

David A. Starrett

A general welfare framework is proposed for examining the behavior of a Tiebout type model in which consumers choose among a variety of communities providing local public services. General expressions are derived for measuring fiscal externalities and the second best nature of Tiebout taxation is explored.

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