Question

2. Majority voting does not necessarily guarantee an efficient allocation of state and local government goods & services in our example without mobility.  How might a Teibout modeled community’s majority vote be more likely to achieve an efficient allocation of goods & services?

Answer 1

Teibout model is a positive political theory wherein a non-political solution is provided to the free rider problem on governance. It basically states that competition between several government bodies places them in competition to exceed each other and makes them provide local public goods at an optimal level so that consumers are not made to pay excess nor try to get it for free. For example if a community likes the public good, they will stay in the region or move out if they dont like the good, making the good affordable to people who know that is the equilibrium price level for the economy.