Heterogeneous Tiebout communities with private production and anonymous crowding

his paper examines, in the context of a multiple types of consumers, a set of necessary and sufficient conditions under which equilibrium and optimum exist, and involve mixing types of consumers in jurisdictions. Pricing includes visa permits for entry. Following Berglas (1976), we assume anonymous crowding and complementarities in production. For a large economy, we prove existence of equilibrium and the first and second welfare theorems. Our simultaneous optimization approach provides a new technique for showing existence of equilibrium in local public good economies with local production and a continuum of agents.Financial support of FCT and INOVA (Portugal), the European Science Foundation (through the activity “Public Goods, Public Projects and Externalities”), and the Spanish Ministry of Education and Science under the grant SEJ2008-03516