Private Production, Collective Consumption, and Regional Population Structure
Theories of trade and migration explain the distribution of individuals among regions based on private good productivities. The theory of local public goods (LPG's) uses collective good consumption economies to explain the size and composition of communities. This essay combines the two theories, to explore regional population heterogeneity and stability. Assuming that individuals must consume and produce in the same jurisdiction, the paper examines the nature of efficient allocations, the tensions between the private and public incentives, the nature of the equilibrium (if any) which migration among jurisdictions will generate, and how such equilibrium will depend on tax rules for sharing the costs of the LPG.