According to the Tiebout hypothesis,
◦ an optimal (or most efficient) level of output exists for every public good.
◦ an efficient mix of public goods is produced when local land/housing prices and taxes reflect consumer preferences.
◦ a good or service is usually so costly that its provision generally does not depend on whether any single person pays.
◦ under certain conditions, when externalities are present, private parties can arrive at the efficient solution without government involvement.