Pseudo-Public Goods and Urban Development: A Game Theoretic Model of Local Public Goods

In his 1956 article, “A Pure Theory of Local Expenditures,” Charles Tiebout introduced the foundation of what was to become the competitive market model of analyzing local government service provision and choice of residential location. This model has since served as the base of a large body of work describing and evaluating the impact of the actions and structure of local government. Recent philosophical and ideological trends in government have led to many services and amenities traditionally provided directly by local governments being supplied instead by various privatized arrangements. This article presents a game theoretic model of local public good provision that takes into account the impact of privatized service delivery. The model develops a framework for analyzing the public/private decision process and the integration effects of these decisions.