This paper examines the effects of school vouchers on the equilibrium of a simple two-community model with local provision of education. Individuals differ only in income and one community imposes a fixed cost on its residents. We show that the introduction of a simple voucher system can result in a Pareto improvement as an equilibrium phenomenon. This improvement brings higher education quality to both communities. © 2002 Board of Trustees of the University of Illinois. All rights reserved.
Luengo-Prado, M. J., & Volij, O. (2003). Public Education, communities and vouchers. Quarterly Review of Economics and Finance, 43(1), 51–73. https://doi.org/10.1016/S1062-9769(02)00152-7