Does endogenous formation of jurisdictions lead to wealth-stratification?
- 关键词：Jurisdictions ; Local public goods ; Taxes ; Wealth-stratification ; Stability
- 刊名：Journal of Economic Theory
- 出版年：2007
- 期刊代码：70_00220531
- 类别：eco
- 出版时间：January 2007
- 卷：132
- 期：1
- 页码：569-583
- 文件大小：243 K
摘要
Conditions under which endogenous processes of jurisdiction formation entail wealth-stratification are examined in a model where unequally wealthy households with identical preferences form jurisdictions in order to produce a public good financed by proportional taxation. We define a stable jurisdiction structure to be a partition of the households into jurisdictions that is immune to individual deviations. We define a jurisdiction structure to be wealth-stratified when each jurisdiction is composed of households who form an interval with respect to the ordering of their wealth. We show that a necessary and sufficient condition for the stratification of any stable jurisdiction structure is for the individual preferences for the public and the private good to exhibit a relation of gross substitutability/complementarity between the public good and the private good that is independent from prices and wealth.