Chris Stoddard, in one of his articles, wrote a summary of the Tiebout Model or Tiebout Theory. He was able to touch on three things that are very important to the Tiebout model of local expenditure. These three things are the concept of the Free Riders, Preference Revelation and Preference Aggregation. These things will be discussed in this article to help put the economic theory of Mr. Tiebout into perspective.

Being a summary, Chris Stoddard\’s article had very limited explanations as to what free rider, preference revelation and preference aggregation were. Free riders, in economic terms, are people who consume more than their fair share of resources or goods and services. These can also be people who shoulder less than a fair share to produce these goods and services. These people are usually associated with the issue of the “free rider problem”, an issue addresed by Mr. Tiebout in his article about local expenditure. The origin of the term is rooted in the literal meaning of the words – free riders are people who do not pay for their fare while riding a public transport. Obviously, local expenditure will be greatly affected if there a lot of free riders. This will make the system unable to operate due to a lack of funds.

Preference Revelation, or the Revealed Preference Theory, is a theory developed by the economist Paul Samuelson that states, a person\’s preferences are revealed by his or her purchases. This preference revelation is important to the Tiebout Model because to be able to offer the goods or services efficiently, local governments should be able to identify the different preferences of the members of its community. In so doing, it can focus its resources on these goods and services, helping local expenditures become more cost-effective in the long run.

Preference Aggregation is also very important to the Tiebout model. This concept means that certain individuals would reveal their preference and that their preferences are what sets them apart from other individuals. These differences in preference is of great help when trying to address local expenditures because in this way, when local governments are working like normal markets, local governments can adjust what services they can readily offer based on the needs of their specific target market, in this case, the members of their community.

Chris Stoddard\’s overview of the Tiebout Model is of great significance since it gives the theory\’s important concepts in a nutshell. The free riders are something an efficient community needs to lessen, and revealed preferences are a necessity to know what services to offer and the revealed aggregation of preference is important to know who the target market is or to whom the services should be offered. These concepts ultimately lead to Mr. Tiebout\’s assumption that a Local Government\’s local expenditure issues can be resolved with an economic solution rather than a political solution. It is a theoretical practice that can be observed on a small scale or on the world stage were goods and services are becoming more and more competitive when observed from an economic viewpoint.

Author Bio: Are you looking for more information regarding chris stoddard ? Visit http://www.csiss.org/classics/content/43 today!

Category: Finances
Keywords: tiebout model,local expenditure,preference revelation,free riders,local governments,chris stoddard