208 8: Rational Choice Th eory and Irrational Behavior
packages and could move to the location that best fi t their preferences. Competi-
tion would force these multiple agencies to produce high-quality public services
at low cost, their alternative being to face being abandoned by the public. Th is
line of reasoning suggests that, rather than centralized bureaucracies providing
public goods and services, they could be better supplied by a competitive market
arrangement.
Th ese arguments were fi rst formally articulated in a seminal 1956 article by
Charles Tiebout. Like Tullock, Downs, and Niskanen, Tiebout’s work also rested
on the twin assumptions of self-interest and methodological individualism. Tie-
bout’s work, however, centered not on the internal workings of bureaucracy but
on the relationship between citizens and public agencies as consumers and pro-
ducers of public goods. Tiebout argued that a competitive market for public ser-
vices could be created if mobile citizens could shop across local jurisdictions for
the package of public services and attendant tax burden that best suited their pref-
erences. As Tiebout put it, mobility would provide “the local public goods coun-
terpart to the private market’s shopping trip” (1956, 422). If citizen-consumers
shopped around for preferred tax-service packages, competitive pressures would
force producers—that is, local governments and public agencies—to respond to
citizens’ preferences. Th e result, at least in theory, would be effi ciently produced
public services that refl ected public demand for those services.
Note that the Tiebout model prescriptively implies the exact opposite of or-
thodox approaches to supplying public services. Th e central hypothesis of the
Tiebout model and its various extensions is that many agencies competing hori-
zontally (across jurisdictions) and vertically (within jurisdictions) will provide a
higher-quality service at a lower price, and be more attuned to citizens’ prefer-
ences, than will large bureaucracies in centralized jurisdictions.
Th is hypothesis has stimulated an enormous amount of empirical and pre-
scriptive research on the diff erences between monocentric (centralized, single-
jurisdiction) and polycentric (fragmented, multijurisdiction) government. Much
of this research has sought to assess the validity of the Tiebout model by exam-
ining the impact of fragmentation on spending for public services. According to
public administration orthodoxy, highly fragmented institutional arrangements
for public services results in ineffi cient duplication and thus should result in
higher levels of spending. According to the Tiebout hypothesis, fragmentation
stimulates competition, creates incentives for effi ciency and responsiveness, and
should therefore lower spending. In thirty years of research, no clear winner has
emerged from these competing propositions. George Boyne (1998, 42–43) re-
views fourteen studies examining the eff ects of fragmentation on spending by var-
ious forms of local government. Of the approximately twenty-fi ve variables used
to measure fragmentation in these studies, about half were associated with lower
spending by local units of government, two-fi ft hs were associated with higher lev-
els of spending, and the remainder were statistically insignifi cant. Th ese numbers
give a slight edge to the Tiebout hypothesis, but not by much. In a similar review