Tiebout Economies with Differential Genetic Types and Endogenously Chosen Crowding Characteristics

Abstract We consider a Tiebout economy with differential crowding and public projects in which agents are distinguished by their tastes and genetic endowments. Agents choose which crowding characteristic, for example, a skill, they wish to express, and this affects their value to other members of their jurisdiction, club, firm, etc. An agent's choice is influenced both by his genetic endowment, which affects his cost of acquiring crowding characteristics, and by his preferences over which crowding characteristic he expresses. We show that if small groups are strictly effective, the core is equivalent to the set of anonymous competitive equilibrium outcomes, but that the core generally contains taste-homogeneous jurisdictions. Journal of Economic Literature Classification Numbers: H41, H72.

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