local public good

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A public good that is available only within a limited geographical area. Examples include a radio signal that can be received only within a limited distance of the transmitter, and a school that restricts admission to a defined catchment area. Local public goods are important for understanding the economics of fiscal federalism. The key feature of local public goods is that consumers reveal their preferences when they make a choice of jurisdiction in which to reside. The Tiebout hypothesis argues that this effect ensures competition between jurisdictions to attract population and can thus achieve economic efficiency. See also club.

Subjects: Economic History.

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