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The Complementarity of Tiebout and Alonso

Eric A. Hanushek, Kuzey Yilmaz
Published Date: 
August 2006
Journal of Housing Economics
pp. 243-261

While residential location is an important aspect of both models of urban spatial structure and local public goods, previous modeling efforts have most commonly separated these. The resulting models yield unrealistic locational predictions. This paper incorporates both motivations simultaneously and finds that the equilibrium outcomes are more consistent with empirical observation. Having a more realistic model permits analysis of current school finance proposals. Because school finance is focused on local jurisdictions, having a more realistic general equilibrium model is essential to assess the impact of governmental involvement on the K-12 school system.