Beyond Exit and Voice: User Participation in the Production of Local Public Goods

Abstract

Two goods commonly provided by local governments - education and neighborhood security - have an enormous impact on day-to-day quality of life and generate a great deal of debate. Because legal structures, institutions, and rules determine how these goods will be provided, funded, and consumed, one might expect legal academics to be important participants in the public discourse surrounding these goods. In fact, the legal academy's contribution has been limited because legal scholars have failed to generate a convincing descriptive account of how the quality of these goods is determined and how people make choices about them. Legal scholarship has typically assumed that the quality of local public goods is driven by some combination of market-like consumer behavior ("exit") and political activity ("voice"). Although the "exit-voice" framework is useful, it is incomplete with respect to goods like education and neighborhood security. It overlooks the critical role of user behavior - the acts and omissions of the school's students and the neighborhood's residents - in determining the quality of such goods. If participation is central to quality and users are heterogeneous in their participation, then understanding the formation, membership, and internal behavior of user pools (individual neighborhoods and schools) is crucial for law and policy. For example, an understanding of these dynamics would transform the current debate over education vouchers and shed new light on practices of residential zoning. This paper uses game theory to systematically work through the implications of user participation for education and neighborhood security. I examine two related collective action problems: the first involving an individual's choice of a consumption community or user pool, and the second involving an individual's choice of action within a particular user pool. I then explore how these two games interact with each other and with legal rules to generate real-world outcomes. Finally, I briefly consider two legal mechanisms - education vouchers and residential zoning - through the lens of user participation.