The dominant law and economics model of local government, based on the work of Charles M. Tiebout, assumes that decentralization of power to local governments promotes the efficient delivery of public goods and services. In his seminal article, A Pure Theory of Local Expenditures, Tiebout contended that the existence of a large number of local governments in any given area permits a "market solution" to the question of how to determine the level and mix of government services that people desire. The multiplicity of local governments in an area means that, as long as each locality is free to adopt its own mix of services, regulations, and taxes, area residents will have a variety of packages of local government actions to choose among in determining where to live. An individual, as a "consumer-voter," can decide on the type and level of local services she wishes to receive, the type of local regulation she likes, and the local tax burden she is willing to assume by, in effect, shopping around among various localities and moving to the one that best suits her preferences. A metropolitan area, thus, functions as a kind of "marketplace" in which, due to interlocal mobility, residents are more likely to have their preferences satisfied by local government offerings than if comparable public goods and services were offered by higher levels of government.
Law | Law and Economics | Law and Politics
The Rise of Sublocal Structures in Urban Governance,
Minn. L. Rev.
Available at: https://scholarship.law.columbia.edu/faculty_scholarship/927