Jonathan Gruber, teaching MIT's 14.41 Public Finance and Public Policy, extends public goods theory to the question of which level of government should provide what. He lays out fiscal federalism, the division of taxing and spending responsibilities between federal, state, and local governments, and works through the economic logic for decentralizing decisions about local public goods like schools and roads versus centralizing goods with broader spillovers. The lecture covers the Tiebout model of households sorting themselves across communities by voting with their feet, the conditions under which that sorting produces efficient outcomes, and the complications that arise when jurisdictions differ in wealth or when public goods generate benefits beyond their borders. Gruber connects the theory to real intergovernmental grant design and the tradeoffs policymakers face in structuring transfers between levels of government. This is a full eighty one minute class session, presented with the analytical rigor typical of the course.