Author: Epple, D.N and Romano, R
Abstract: Two significant challenges hamper analyses of collective choice of educational vouchers. One is the multi-dimensional choice set arising from the interdependence of the voucher, public education spending, and taxation. The other is that household preferences between public and private schooling vary with the policy chosen. Even absent a voucher, preferences over public spending are not single-peaked; a middling level of public school spending may be less attractive to a household than either high public school spending or private education coupled with low public spending. We show that Besley and Coateās (1997) representative democracy provides a viable approach to overcome these hurdles. We provide a complete characterization of equilibrium with an endogenous voucher. Click here to read more.