This paper extends the capitalization approach of Wallace E. Oates to consider supply adjustment in a local public goods market of the sort hypothesized by Charles M. Tiebout. It is shown that Oates's singleperiod cross-section analysis-demonstrated demand conditions approximated Tiebout's hypotheses in a situation in which supply was not in long-run equilibrium. Analysis of capitalization of taxes, school expenditures, and road maintenance expenditures over five successive census periods in the Boston area indicates a move toward equilibrium in the market for schooling, but not in all other markets for local public goods.

Taxes, Spending, and Property Values: Supply Adjustment in a Tiebout-Oates Model

We study information acquisition in a flexible framework with strategic complementarity or substitutability in actions and a rich set of externalities that are responsible for possible wedges between the equilibrium and the efficient acquisition of information. First, we relate the (in)efficiency in the acquisition of information to the (in)efficiency in the use of information and explain why efficiency in the use is no guarantee of efficiency in the acquisition. Next, we show how the acquisition of private information affects the social value of public information (i.e., the comparative statics of equilibrium welfare with respect to the quality of public information). Finally, we illustrate the implications of the results in a monetary economy with price rigidities and dispersed information about productivity shocks.

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Information Acquisition and Welfare

A BELIEF that the application of science to the solution of practical problems represented a sure foundation for human progress has been a persistent theme in American intellectual and economic history [26, 64]. During the two decades following World War II this belief was seemingly confirmed by the dramatic association between the progress of science and technology and rapid economic growth. The technological revolution in American agriculture, the growth of industrial productivity, the contributions of science to military and space technology, and the virtual elimination of the business cycle seemed to reinforce this perspective. By the late 1960's, however, the formula that had permitted the United States to move into a position of scientific, economic, and political leadership in the world community was faced with both an intellectual and a "populist" challenge.1 A view has emerged that the potential consequences of the power created by modern science and technology-reflected in the cataclysm of war, degradation of the environment, and psychological cost of rapid social changeare obviously dangerous to the modern world and to the future of man. The result has been to seriously question the significance for human welfare of scientific progress, technical change, and economic growth.

Jerome Rothenberg

Papers

The Economies of Congestion and Pollution: An Integrated View

Strategic Interaction and Resource Allocation in Metropolitan Intergovernmental Relations

Spatial Economics: Discussion