Tiebout, Coase and urban scaling

Abstract A growing body of urban research takes a natural science perspective on systems of cities as self-organising human clusters. From a systems perspective, this work, particularly the growing number of city scaling studies, introduces a determinism to studies of city size, efficiency and performance that may not sit well with regional science and urban economic planning models. It finds that agglomeration economies seem to follow regular scale-free power laws that reflect competitive dynamics within an entire interacting human system of cities and that a city’s performance is therefore statistically bounded by the whole system. Where does this leave empirical models of individual city performance and behavioural models of urban political economy that underpin them? The paper links two seminal economic models of the 20th century that were motivated to demonstrate the possibility of preference revelation for the ‘unpriceables’ that give cities their value. Tiebout’s and Coase’s models of social order both concern natural clustering principles, governed by voting with feet, voice and price. Voting with feet is a much more animalistic social ordering mechanism than voting with voice and the paper introduces the idea of scale-free Tieboutian models—natural science models of revealed preference for local public expenditure.