Tiebout sorting and competition
Over 60 years ago, Charles Tiebout hypothesized that decentralized provision of public services (such as public schools) through local governments can result in efficient levels of such services (Tiebout, 1956). His key insight was that residential mobility of households might provide a sufficient disciplining force (analogous to typical market forces) to insure efficient provision of local public services. With sufficient local competition, there would be no room for local governments to engage in excessive political rent seeking, and enough variety in local tax and service packages would emerge to satisfy different consumer tastes. In the case of public education, however, serious issues related to equity and equal opportunity also emerge, suggesting a tradeoff between the promise of Tiebout efficiency and the emergence of inequities in educational opportunities for children of different income classes and different races.
