Penn EM. Institutions and sorting in a model of metropolitan fragmentation. Complexity. 2004.
Abstract:I construct a theoretical and computational model of municipal fragmentation and Tiebout competition and show that factors such as income heterogeneity, political institutions and the discretionary power of municipalities to tax can substantially affect both where individuals choose to live and how cities form. Conclusions are drawn about the types of cities that form when secession is an option. These conclusions support the idea that increasing the range of choices available to municipalities and to individuals can actually leave a majority of residents worse-off.