A Comparison of Political Institutions in a Tiebout Model

Abstract

In this paper, we construct a computational model of Tiebout competition. We show that the notion that Tiebout competition, as a result of enforcing efficiency, renders institutional arrangements unimportant does not preclude the possibility that political institutions may differ in their ability to sort citizens. In particular, institutions which perform poorly given a single location, may perform better when there are multiple locations because they allow for improved sorting. We demonstrate that insights from simulated annealing, a discrete nonlinear search algorithm, may explain this improvement.