We show that space matters in designing the optimal provision of local public goods (LPGs). Geography imposes particular institutional structure of local governments due to the overlapping of market areas associated with different LPGs. The optimum can be decentralized through local governments...

This article discusses the distortive effect of the federal income tax on the efficiency of resource allocation within and between cities. This distortion shifts production to the smaller and less productive cities from the larger and more productive cities. To eliminate these distortive...