Dynamic Cooperation in Local Public Goods Supply with Imperfect Monitoring
AbstractThis paper develops a two-country model where each country invests in a local public good generating positive cross-countries externalities. In a repeated game setting where the level of public good depends on a non-observable effort by each country plus a random shock, we characterize the existence condition of a cut-off trigger strategy equilibrium inducing full cooperation. Moreover, we show that introducing a small positive correlation between the two country-specific shocks gives rise to a manipulation of information thereby restricting the prospects of cooperation.
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Bibliographic InfoArticle provided by ENSAE in its journal Annals of Economics and Statistics.
Volume (Year): (2011)
Issue (Month): 101-102 ()
Other versions of this item:
- Cheikbossian, Guillaume & Sand-Zantman, Wilfried, 2008. "Dynamic Cooperation in Local Public Goods Supply with Imperfect Monitoring," IDEI Working Papers 527, Institut d'Économie Industrielle (IDEI), Toulouse.
- H7 - Public Economics - - State and Local Government; Intergovernmental Relations
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
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