Multidimensional free-mobility equilibrium: Tiebout revisited

Abstract

The paper provides consistent mathematical framework for seminal Tiebout free-mobility model (1956). Our setting supports continuum of consumers with multidimensional preferences and finite number of strategic public good providers. We accommodate the most general assumptions: providers' production function may have variable returns to scale, our framework is rich enough to incorporate possible externalities, spillovers, scale economies, network effects, etc.; consumers utility may depend on choice of other agents in almost arbitrary way. We focus on equilibrium existence, however the questions of efficiency and stability are not left behind. The model can also be applied in several related fields, most notably in political economy.