A COMPARATIVE INVESTIGATION OF TRANSFER PRICING PRACTICES IN SELECTED INDUSTRIES Allocative implications and endogenous school effectiveness In the model presented above, Tiebout choice hurts low-income students in two ways. First, it permits increased stratification of students. Because total peer group is in fixed supply, stratification necessarily offers better peers to wealthy students and worse peers to low-income students. Second, if the market mechanism functions and families sort on effectiveness, it assigns low-income students to schools that are below-average in their effectiveness
