Charles Tiebout conjectured that “voting with your feet” in a system of local go
ID: 383981 • Letter: C
Question
Charles Tiebout conjectured that “voting with your feet” in a system of local government would produce an efficient supply of local public goods.
A. What are local public goods? How do they differ from pure public goods? (at least 50 words)
B. Discuss three assumptions that must be satisfied in order for the Tieout hypothesis to be correct. (at least 50 words)
C. Suppose that the Tiebout hypothesis fails. What is the role of the federal government in a fiscal federalist system? (at least 50 words)
Explanation / Answer
1) Local public goods are public goods that can be accessed by only the residents of a particular community. Examples being parks, beaches etc.
Pure public goods are on the other hand common to all public and citizens at large. Examples being: clean air, security etc.
2) Three assumptions:
3) The role of a federal government in a fiscal federalist system is to ensure to spend government money to provide for public goods and ensure welfare of its citizens as a whole. The federal government exercises fiscal policy to spend and build facilities which are a source of benefit and welfare to all citizens.