The Tiebout Hypothesis Under Membership Property Rights

We consider the problem of producing an impure public good in var-ious jurisdictions formed through the strategic decisions of agents. Our environment inherits two well-known problems: (i) Under individual decisions, there is a tension between stability and e ¢ ciency; (ii) Under coalitional decisions, stable jurisdiction structures may fail to exist. The solution we propose is the use of membership property rights: When a move among jurisdictions is subject to the approval of the agents whom it a¤ects, coalitionally stable jurisdiction structures coincide with those which are e ¢ cient