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Tiebout Bias and the Demand for Local Public Schooling

Daniel L. Rubinfield, Perry Shapiro and Judith Roberts
The Review of Economics and Statistics
Vol. 69, No. 3 (Aug., 1987), pp. 426-437
Published by: The MIT Press
DOI: 10.2307/1925530
Stable URL: http://www.jstor.org/stable/1925530
Page Count: 12
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Tiebout Bias and the Demand for Local Public Schooling
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Abstract

Until recently estimates of demand functions for public goods were obtained (either with aggregate or micro survey data) using single equation estimation techniques. However, demand estimates may be biased when individuals' choices of communities are dependent upon the quantity and quality of public good provided. This paper spells out the nature of this bias (called Tiebout bias), and suggests and improved maximum-likelihood estimation technique. The technique is applied to a data set involving local public education in Michigan.

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