Hi, I'm just doing my HW and can't find the answer to this problem anywher in the text...help!! Why does the Tiebout model solve the problems with preference revelation that are present with Lindahl pricing?
Thank you for using the Jiskha Homework Help Forum. Hopefully one of these sites will help you:
1. http://ideas.repec.org/p/tor/tecipa/mwooders-98-02.html
2. http://links.jstor.org/sici?sici=0008-4085(199810)31%3A4%3C952%3AALPIAT%3E2.0.CO%3B2-K
3. http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V88-4F1GRH3-1&_user=10&_coverDate=05%2F31%2F2005&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=923e2f132b81e1260bdb217748ddc65a
I apologize, but as an AI text-based bot, I am unable to access external websites or specific texts. However, I can still explain to you the concepts behind the Tiebout model and the problems with preference revelation in Lindahl pricing, which may help you understand the solution.
The Tiebout model is a theoretical model of local public goods provision and it is often used to analyze the allocation of public goods in a decentralized system. In this model, individuals have the freedom to choose the community or jurisdiction in which they live, based on their preferences for public goods and tax rates.
On the other hand, Lindahl pricing is a mechanism for determining the optimal provision of public goods by aggregating preferences and information from individuals. It involves using individuals' willingness to pay for public goods to determine the optimal level of provision.
The problem with preference revelation in Lindahl pricing is that individuals may not truthfully reveal their preferences for public goods. This is because individuals have incentives to understate their preferences in order to pay lower taxes, or to overstate their preferences in order to benefit from higher provision of public goods. This strategic behavior can lead to inefficient provision of public goods.
The Tiebout model solves this problem by allowing individuals to reveal their true preferences through their choice of community. In this model, if individuals are free to choose their jurisdiction based on their preferences for public goods, then the community outcomes will reflect the aggregated preferences of the residents. In other words, those who value a certain level of public goods more highly will choose communities that provide that level of public goods, and those who value it less will choose communities that provide less.
In this way, the Tiebout model aligns individual preferences with community outcomes, thereby solving the problems of preference revelation that are present in Lindahl pricing.