Answer to Question #60445 in Finance for Doltsee

Question

Is there scope for inter-governmental competition in the Tiebout model? Explain.

Answer 1

The essence of the Tiebout model is that there is in fact a non-political solution to the free rider problem in local governance.
Tiebout believes that the local governments have a more precise and detailed knowledge of the needs of the local population, thus making them more readily able to accurately tax the people on the goods and services it provides to the local population.